

























































































































































































V 







a > 


THEFT, PILFERAGE, NONDELIVERY, BREAKAGE, ETC., 
OF EXPORT AND IMPORT SHIPMENTS 


% 5 %- 

HEARINGS 

BEFORE THE 

SUBCOMMITTEE ON MARINE INSURANCE OF THE 
• : > U ..COMMITTEE ON THE 

MERCHANT MARINE AND FISHERIES 

HOUSE OF REPRESENTATIVES 


SIXTY-SEVENTH CONGRESS 
FIRST SESSION , 


July 18, 19, and 20, 1921 



60(583 


WASHINGTON 

GOVERNMENT PRINTING OFFICE 
1921 








% 


COMMITTEE ON THE MERCHANT MARINE AND FISHERIES. 

House of Representatives. 


SIXTY-SEVENTH CONGRESS. 


WILLIAM 

GEORGE W. EDMONDS. 

FRANK D. SCOTT. 

WALLACE H. WHITE, JR. 
FREDERICK R. LEHLBACH. 

EDWIN D. RICKETTS. 

CARL R. CHINDBLOM. 

ALBERT W T . .TEFFERIS. 

NATHAN D. PERLMAN. 

BENJAMIN L. ROSENBLOOM. 
HARRY C. GAHN. 

Rene G. 


S. GREENE, Chairman. 

ARTHUR M. FREE. 

WILLIAM H. KIRKPATRICK. 
OGDEN L. MILLS. 

RUFUS HARDY. 

LADISLAS LAZARO. 
WILLIAM B. BANKHEAD. 
EDWIN L. DAVIS. 

THOMAS H. CULLEN. 
SCHUYLER O. BLAND. 

CLAY STONE BRIGGS. 

)E Tonnancour, Clerk. 


SUBCOMMITTEE ON MARINE INSURANCE OF THE COMMITTEE ON 
THE MERCHANT MARINE AND FISHERIES. 

House of Representatives. 

SIXTY-SEVENTH CONGRESS. 

FREDERICK R. LEHLBACH, Chairman. 

GEORGE W. EDMONDS. RUFUS HARDY. 

HARRY C. GAHN. LADISLAS LAZARO. 

ARTHUR M. FREE. THOMAS H. CULLEN. 

WILLIAM H. KIRKPATRICK. 

Rene G. de Tonnancour, Clerk. 


Dr. S. S. Huebner, expert in insurance to the United States Shipping Board and I he 
Committee on the Merchant Marine and Fisheries. 




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WITNESSES. 





<Ci 


Kush, Benjamin, president of Insurance Co. of North America_ 

Winter, William D., vice president of Atlantic Mutual Insurance Co_ 

Robinson, Wade, marine insurance broker, New York City_ 

Osborn, Frank H., representing various marine insurance companies_ 

McComb, S. D., manager of Marine Office of America_ 

Burke, Louis F., marine manager of the Home Insurance Co_ 

McGee, William II., representing various marine insurance companies_ 

Johnston, J. F., vice president of Appleton & Cox Co_ 

Herrick, Charles E., representing the Institute of American Meat Packers. 
Bentley, F. T., chairman of bill of lading committee of National Industrial 

Traffic League_1___ 

Burchmore, John S., counsel for National Industrial Traffic League_ 

Price, F. H., export agent of Millers’ National Federation_ 

Downes, E. H., chairman of committee on theft and pilferage of Ameri¬ 
can Manufacturers’ Export Association_ 

Griffiths, A. B., representing the Association of Cotton Textile Merchants 

of New York_ 

Guiterman, P. L., representing the American Exporters’ and Importers’ 

Association_ t __ 

Herrick, Charles E., representing the Institute of American Meat Packers. 
Baldwin, C. B. transportation manager of the United States Shoe Ma¬ 
chinery Corporation_ 

Hill, W. J., representing the Cleveland Worsted Mills Co. and the Cham¬ 
ber of Commerce of Cleveland-- 

Englar, D. Roger, counsel for the Trade Protective Association_ 

Williams, Nathan B., representing the National Association of Manu¬ 
facturers--- 1 - 

Gonzalez, Manuel, chief Latin-American trade division, National Asso¬ 
ciation of Manufacturers_ 

Laws, Francis S., representing the Insurance Co. of North America- 

Hilton, Fred E., representing the Brockton Chamber of Commerce and the 

New England Shoe and Leather Association- 

Jones, Ralph B., member of the New England Shoe and Leather Associa¬ 
tion, and of the New England Wholesalers’ Association- 

Mitchell, W. C., chairman of the traffic committee of Tanners’ Council— 
Nellis, J. C., representing the National Association of Box Manufacturers - 
Imlay, William, general claim agent of New York & Cuban Mail Steam¬ 
ship Line- 

Hylander, C. G., representing William Wrigley, jr., Co- 

Merriam, Ralph, representing William Wrigley, jr., Co- 

Hanlin, H. R., representing United American Lines, European service- 

O’Connor, T. V., commissioner, United States Shipping Board- 

Guilford, R. S., manager of westbound freight and claims department, 

International Mercantile Marine Co.L'.J^..'--- 

Bernard, William E., representing the National Board of Steam Navi¬ 
gation of New York—;-- 1 - 

Bresee, R. A., New York-port manager, Munson Steamship Co- 

Senecal, J. N., representing American Steamship Owners’ Mutual Pro¬ 
tection and Indemnity Association- 

Blake, W. A., of Baltimore, Md- 

Ryan, F, A., assistant freight traffic manager of the International Mer¬ 
cantile Marine Co- 

Waldorf, J. E., of Chicago, Ill- 


6 

87 

50 

70 

78 

94 

9G 

101 

102 

122 

129 

133 


147 


152 


153 

172 


175 

180 

192 

207 

208 
212 

221 

222 

228 

231 


236 

258 

269 

279 

290 


294 


303 

307 

310 

319 


322 

336 

































4 


CONTENTS. 


Page. 

Kellogg, Chester B., freight traffic manager of Munson Steamship Line_ 338 

Knowles, Kenneth E., manager of South American branch of the Munson 

Steamship Line_ _ 343 

Leakway, A. N., representing the Bull-Insular Line____ 350 

Loines, Russell H., secretary of American Steamship Owners’ Mutual 

Protection and Indemnity Association_ 355 

Hickox, Charles R., representing certain steamship companies_ 373 

Campbell, Ira A., representing the American Steamship Owners’ Associa¬ 
tion_ 388 

Laws, Francis S., representing the Insurance Co. of North America_ 398 

Goulder, Harvey D., representing the Lake Cancers’ Association_ 399 


\ 















THEFT, PILFERAGE, NONDELIVERY, BREAKAGE, ETC., OF EX¬ 
PORT AND IMPORT SHIPMENTS. 


Subcommittee of the Committee on the 

Merchant Marine and Fisheries, 

House or Representatives, 

T V ashing ton, Monday , July 18 , 1921 . 

The subcommittee met at 10 o’clock a. m., Hon. Frederick R. Lelil- 
bach (chairman) presiding. 

Mr. Lehlbach. The reason this committee determined to hold this 
hearing and issued the invitation that it did, is as follows: Judging 
from representations made to this committee, losses through theft, 
pilferage, breakage, and other damage, and nondelivery have reached 
abnormal proportions in American commerce within recent years. 
Such losses, moreover, seem to be increasing rather than diminishing. 
It is alleged that with respect to certain of our foreign markets, in¬ 
surance rates for this type of hazard have increased until they ex¬ 
ceed those charged for all of the ordinary marine risks combined; 
that during the past 12 months such rates have increased from 100 
to 300 per cent and even more, depending upon the market under 
consideration; that the problem is not confined to a limited number 
of our foreign markets, but extends to practically every foreign mar¬ 
ket to which our goods are sent; that various important insurance 
companies, despite the high rates, have already withdrawn from this 
field of insurance as regards certain important markets and that 
others are contemplating similar action in the near future unless 
conditions improve;-and that many, if not most underwriters, when 
accepting the theft, breakage, and nondelivery hazard, agree to pay 
not more than 75 per cent of any claim, the merchant being obliged 
to assume the balance of the loss. Complaint has been made to the 
effect that there has been a distinct tendency on the part of water 
carriers, during the last few years, to assume only a nominal liability 
for negligence under their bills of lading, and at times to expressly 
exempt themselves from all liability for theft, breakage, and non¬ 
delivery. 

Present conditions, if the allegations referred to are correct, would 
seem to indicate the existence of an intolerable economic waste which 
calls for united effort toward correction at the earliest possible date. 
It is the purpose of these hearings to bring out the facts with re¬ 
spect to (1) the approximate extent of loss through theft, breakage, 
and nondelivery; (2) the bearing of such loss upon this country’s 
position in the world’s competitive markets; (3) the causes of such 
loss, and (4) the remedy, or combination of remedies, best adapted 
to serve as a solution of the difficulty. 



6 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


To a large extent the question is world-wide. But our leading 
competitors, it seems, have already undertaken to investigate the 
subject and to eliminate the causes of the trouble. It seems clear 
that we should keep pace with our competitors in working out a 
solution. The nation that effects a substantial improvement is likely 
to be at a decided advantage in foreign markets as compared with 
countries which neglect the matter and continue to operate under 
present conditions of waste. The problem is strategically associated 
with the development of our foreign trade opportunities and the 
maintenance of an American merchant marine. But even ignoring 
the vital element of foreign competition, it is clear that such waste 
should not be tolerated longer than is absolutely necessary. 

The committee desires to hear all sides of this question. It has 
therefore expressed a desire to have the several interested groups— 
underwriters, shippers, and ship operators, through their representa¬ 
tives—give their statement of facts and their recommendations as to 
the most practicable manner of dealing with the problem. The com¬ 
mittee felt that it would be advisable to have the several interested 
groups present their respective cases separately, the underwriters 
appearing first, next the shippers, and then the ship operators. It 
is the desire of the committee to hear every group fully. The method 
of procedure indicated was simply adopted in the interest of clear¬ 
ness and economy of time. 

I would say, further, on behalf of the committee that there are a 
large number of witnesses who have expressed their willingness to 
be present, to testify to the facts, and to express their opinions. We 
have only a limited time in which to conduct this hearing. This 
hearing must close on Wednesday. In order that all may have full 
opportunity to be heard, in the interest of expedition and in the 
interest of orderly procedure, witnesses will not be questioned nor 
will their testimony be commented on by other witnesses or spectators 
who may be present. Criticism or questioning witnesses will be 
strictly reserved to the members of the committee themselves. 
Should any statement of fact be made, or an opinion or view ex¬ 
pressed, which does not accord with the views of others who are 
present, they, in their own time, will have full opportunity either 
to contradict an alleged fact or dissent from the opinions expressed, 
but they may not interrupt witnesses on the stand. 

The first witness to be heard will be Mr. Rush. Before you pro¬ 
ceed with your statement, Mr. Rush, will you state, fully, your occu¬ 
pation and your connections with whatever interests may be con¬ 
cerned in this examination. 

STATEMENT OF MR. BENJAMIN RUSH, PHILADELPHIA, PA., PRESI¬ 
DENT OF THE INSURANCE CO. OF NORTH AMERICA. 

Mr. Rush. My name is Benjamin Rush. I reside in Philadelphia. 
I am president of the Insurance Co. of North America. I am also 
chairman of the American Marine Insurance Syndicates of New 
York. 

Mr. Chairman and gentlemen of the committte, I have prepared a 
paper here, thinking it would save your time and my own if I had 
it ready to file at the proper moment. With your permission, I 
would like to read it now. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


7 


Although I appear before you this morning as a representative of 
a marine insurance company, I want to emphasize the fact that the 
question we are considering, namely, the heavy drain on commerce 
which now exists owing to the prevalence of losses due to theft, 
pilferage, breakage, and nondelivery of goods intrusted to common 
carriers both by land and sea for transport either within the United 
States or between the United States and foreign countries, is only 
incidentally an insurance matter. 

It should be considered as a matter which affects all merchants 
and shippers of goods in the United States and through them every 
purchaser and user of goods and commodities in the country. 

The position which the insurance companies hold in reference to 
these losses is merely that they are, so to speak, on the firing line— 
they are the people to whom claims for these losses come, and they 
are therefore the people who are competent to testify as to the nature 
and cause of these losses; their extent so far as their own individual 
experience shows and as to the methods which should be adopted 
to do away with them. 

Speaking now as president of the Insurance Co. of North America, 
I would like first and foremost to call your attention to the growth 
and increase of losses due to theft and pilferage as shown by the 
records of this company. I would call your attention to the follow¬ 
ing statement, which applies to marine cargoes over a five-year 
period. By marine cargoes I mean merchandise of all sorts and de¬ 
scription shipped to and from the United States primarily by 
steamer or motor vessel. 

The statement shows that in 1916 the net losses paid by this com¬ 
pany for theft and pilferage were $ 35 , 574 . 29 , or a theft loss per¬ 
centage to premium of 3.8 per cent. In 1917 it was $ 78 , 064 ; per¬ 
centage of loss, 6 per cent. In 1918 it was $ 108 , 839 , again a per¬ 
centage of loss of 6 per cent. In 1919 it was $ 332 , 041 ; percentage 
of loss of 15 per cent. In 1920 it was $ 1 , 027 , 414 ; percentage of loss, 
27 per cent. And for the first four months of the present year it 
was $ 411 , 348 ; percentage of loss of 41 per cent. 

(The statement in full is as follows:) 

Marine cargoes for five years. 



Net 

premium. 

Net losses. 

Per 

cent. 

Net theft 
losses. 

Theft 
loss to 
premium. 

Theft 
loss to 
entire 
loss. 

1916 . 

$1,139, 663. 99 

.$1,068,599. 04 

95 

$35,574. 29 

Per cent. 
3.3 

Per cent. 
3.0 

1917 . 

1,324,926. 35 
1,830,344. 39 

1,177,235. 62 

90 

78,064. 53 

6. 0 

6.8 

1918 . 

1,159,546. 82 

63 

108,839 19 

6.0 

8.5 

1919 . 

2,160,437. 50 
3, 829,382. 97 
998,623.15 

1,417, 758. 69 

65 

332,041.43 

15 0 

27.0 

1920 . 

3,640,301. 44 

96 

1,027,414. 20 
411,348. 27 

27.0 

28.0 

1 Q ?1 (first. 4 months'). 

955,455. 31 

93 

41.0 

43.0 








The above figures do not include automobile, cotton, inland marine, lake, hull, war. 

N OTE _The “ theft losses *’ are already included in the “ net loss ” figures. Net pre¬ 

miums are gross less returns and commissions. Net losses are gross less salvages. 

The exclusion from these figures of automobile, cotton, inland marine, etc., does not 
implv that there are no theft losses on these classes of insurance. There are plenty of 
them The above figures are intended to show the increase in ratio of theft losses on 
ocean-going general merchandise of all kinds other than cotton. Of course, many of these 
kinds of merchandise such as iron ore, pig iron, hemp, jute, etc., have comparatively 
small theft losses which would of course increase the percentages on the remaining classes 
of merchandise. 

























8 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Rush. I shall speak later regarding the losses as shown by 
our experience on business shipped principally by rail within the 
confines of the United States. 

I desire to call to your attention the increasing amount of these 
losses from year to year, and particularly the increasing percentage, 
and to ask the question, If last year one insurance company paid 
losses by theft and pilferage amounting to over $1,000,000, how much 
was the loss paid by all insurance companies, and how much was the 
total loss from various causes sustained by everybody? 

It certainly runs into many millions of dollars, and constitutes a 
heavy drain on the fabric of our economic situation. 

As a rough index of how these heavy losses have been reflected in 
the increased rates charged by insurance companies to their policy 
holders, I beg to make the following statement: 

Not many years ago the loss by theft was comparatively slight, so 
much so that 10 or 12 years ago it was included in marine insurance 
policies for a nominal premium, practically thrown in for nothing, 
so to speak. 

Thus, 10 years ago this company was able to insure general mer¬ 
chandise against theft and pilferage to and from the United States 
knd the United Kingdom by first-class line steamers at a rate of, say, 
24 cents; to-day our rate is 12-J cents for the kinds of merchandise 
least subject to theft and pilferage, and from there it runs up on 
merchandise shipped under what is known as the a released bill of 
lading” as high as 2 per cent, while under a full bill of lading the 
rate for the first group of merchandise would be 5 cents, and for the 
highest rated group of merchandise, 40 cents. 

I submit a statement of rates herewith to cover losses caused by 
theft and pilferage, which were those charged by this company in 
March last, in reference to which I would say that since that date 
we have practically declined to insure against theft and pilferage on 
goods going to Latin America, by which I mean from the Mexican 
border to Cape Horn, including Cuba, San Domingo, Hayti, and 
certain other islands in the West Indies. 

The statement also shows our classification of goods based on our 
experience of the theft and pilferage hazard. Thus class 4, begin¬ 
ning u Embroideries, hosier}^, ribbons, leather,” etc., is the class 
which we think is stolen most freely and readily, and so on down to 
class 1, which would include such articles as iron ore, steel rails, 
fireproof safes, bales of cotton, and other articles which thieves gen¬ 
erally find it hard to get away with, although, as a matter of fact, 
they are stealing pig iron and steel rails in some South American 
ports at present. 

One glance at this schedule will, I think, indicate to your commit¬ 
tee the very heavy drain, which is imposed on commerce, w T hich is 
called upon to pay such rates, and of the extreme necessity and 
urgency of the adoption of methods which will enable insurance com¬ 
panies to reduce them to the nominal rates which prevailed com¬ 
paratively recently. 

I would also like to state that even at the high rates which are 
charged this company has not made a profit on its theft insurance, 
and was obliged, as stated above, to retire from theft insurance to 
all Latin-American countries on account of the heavy claims which 
it was called upon to pay. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 9 

One more word of explanation, the letter “ R ” at the head of the 
column stands for “ released bill of lading,” while the letter “ F ” 
stands for “ full bill of lading.” 

A released bill of lading is one in which the liability of the carrier 
lias been limited by virtue of an agreement with the shipper, and a 
full bill of lading is one in which the carrier assumes full legal re¬ 
sponsibility for the goods which he carries. 

The mere money extent of the loss and its drain on commerce is 
bad enough, but the moral effect on those who are engaged in com¬ 
merce and in the transportation of the property of others is still 
worse. 

Theft and pilferage are now considered to be a just and proper 
perquisite by some of the employees of common carriers, longshore¬ 
men, customhouse employees, and others in Latin-American coun¬ 
tries, who come in contact with the transportation of goods. 

The thieves, I am pretty sure, are thoroughly organized. 

A few illustrations may be of interest.to the committee: 

I am informed that not so very long ago the New York & Cuba 
Mail Steamship Co., in a very laudable attempt to reduce losses due 
to them and nondelivery on merchandise intrusted to their care for 
transportation between the United States and Cuba, stationed their 
officers in every hatch and gangway to supervise the unloading of 
cargoes in Cuban ports and to search any longshoremen who ap¬ 
peared to be attempting to convert cargoes by Ward Line vessels to 
his own use. 

Within 24 hours they were advised by a representative of the long¬ 
shoremen in Cuba that unless this supervision was removed and the 
longshoremen w T ere allowed to have free and unsupervised access 
to the cargoes which they were unloading a strike would be called 
against the New York & Cuba Mail Steamship Co. 

Another instance is submitted herewith: 

A prominent firm of shoe manufacturers in New England were 
thoroughly alarmed by the increase in theft and pilferage on their 
shoes, which were exported principally to Europe. 

The claims continued to increase in frequency and amount, and 
their rates of premium increased in mathematical ratio. Every 
kind of method was taken to increase the security of the packages in 
which their shoes were shipped, with absolutely no result. The 
thefts steadily continued. Finally the firm decided that they would 
ship all their right-hand shoes on one vessel and their left-hand 
shoes on another and subsequent vessel. This stopped the thefts for 
just about long enough for information to be sent from the other 
side back to the United States, whereupon the thefts again recom¬ 
menced, clearly indicating that the thieves on the other side had 
some kind of an arrangement whereby they could steal left-hand 
shoes from one vessel and right-hand shoes from another vessel and 
put them together again with sufficient accuracy to sell them or other¬ 
wise dispose of them in a foreign market. As a matter of fact, it is 
extremely difficult at the present time to insure boots and shoes with 
any insurance company except at prohibitive rates, and thus a large 
and important domestic industry is threatened with extinction 
unless means be found of arresting and punishing the thieves who 
are preying on this business. 


10 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


That a good proportion of this theft is controllable is indicated by 
the following fact: 

A prominent official of a steamship company was greatly exercised 
over the heavy thefts which were made on merchandise intrusted 
to his steamer line on merchandise to Philadelphia, especially so on 
valuable drugs. Packages which appeared to be absolutely un¬ 
tampered with, when opened up at the consignee’s office, would have 
their contents abstracted in whole or in part and an equivalent 
weight of bricks, stones, or other foreign matter substituted, so that 
the packages would appear to be all right, while the condition of the 
cases apparently showed no signs of tampering with. These two 
facts indicate that ample opportunity was enjoyed by the thieves to 
handle these cases scientifically—opening them up without damage, 
noting the weights, and then abstracting the contents and inserting 
the full weight of worthless material, and resealing the case ready 
for delivery. 

The use of detectives apparently was useless to ascertain who were 
the thieves, and the thefts did not stop until the official of the steam¬ 
ship company above referred to called together his entire staff of 
dock men, masters of vessels, etc., and told them that if the thefts 
did not stop forthwith everyone of them would be discharged and a 
new force engaged. 

The conditions recited then promptly stopped, thus proving that 
the thefts occurred while in the hands of the employees of that com¬ 
mon carrier. 

These illustrations could be multiplied ad infinitum, but there will 
be many representatives of shippers, exporters, and importers, who 
will be prepared to testify before this honorable committee as to their 
own experience. 

What I, as an insurance man desire to do particularly, however, is 
to call to the attention of the committee the causes which, in ifiy 
opinion, have brought about the present deplorable state of affairs, 
and the remedies which should be adopted to terminate them. 

The first cause is, of course, the general wave of lawlessness now 
existing in most countries affected by the Great War (this applies 
not only to losses on merchandise entrusted to common carriers, but 
to the thefts and robberies which are now so prevalent). 

This will have to be handled by a fearless and impartial ad¬ 
ministration of justice unadulterated by sentimentalism and sym¬ 
pathy, but the principal cause, in my mind, of the losses sustained by 
merchants, who entrust their goods to common carriers for trans¬ 
portation, is due to the frequent diminishing of the legal liability 
of the carrier for proper care and custody of merchandise entrusted 
to him by reason of legislative decisions and/or statutory enactments 
authorizing and/or upholding what is known as the “ released bill 
of lading.” 

A released bill of lading is one in which the liability of the carrier 
has been limited by virtue of an agreement with the shipper. 

A full bill of lading is one in which the carrier assumes complete 
legal responsibility for the goods he carries. 

At common law the liability of a carrier covers every hurt or in¬ 
jury to the goods he carried, unless caused by the act of God. the 
public enemy, or their inherent nature. This liability was imposed 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


11 


upon the carrier because the shipper parts entirely with the posses¬ 
sion and control of the goods and knoAvs nothing of Avhat takes place 
during their carriage, while the carrier upon the other hand knows 
or has the means of knoAving everything which befalls them, and 
if they be lost or damaged, how the loss or damage occurred. Such 
rule has the great merit of simplicity, and is perfectly reasonable 
because the carrier can charge a rate commensurate with the risk he 
assumes and it was and still is Avise public policy to hold the carrier 
to strict accountability. Doing so increases his care and the care of 
his seiwants in the course of transportation, and generally increases 
the efficiency of the carrier’s business. 

In the course of time, hoAvever, this simple rule of the common 
law has been modified by statutes and judicial decisions, and the 
carrier’s liability reduced or entirely eliminated under certain con¬ 
ditions. For example, a carrier was permitted to make an agreement 
Avith the shipper limiting the carrier’s lossses to those of Avhich he 
had received notice within an agreed upon time, or to an agreed upon 
value put upon the goods in consideration of their carriage at a low 
rate of freight, or that suits against the carrier must be brought 
within a limited time after deli\ T ery. 

These statutes and decisions have had a far-reaching effect upon 
the carrier’s liability and upon the safe and profitable conduct of 
commerce. 

Whatever justice there may have been in the original arguments 
that brought these statutes and decisions into being, as a matter of 
practical result the remedy has proved Avorse than the disease it Avas 
designed to cure. 

As heretofore recited, in recent years there has been a vast amount 
of theft and pilferage by carriers’ employees, or permitted through 
their negligence, so that the losses upon this account have assumed 
enormous proportions, and the carriers have taken advantage of the 
clauses in their bills of lading to protect themselves against these 
losses, Avhich lias resulted in their falling solely upon the shipper or 
the underwriter. A Avise public policy should at once be invoked to 
alter these conditions and restore, as far as practicable, the general 
rule of the common law so # as to secure and maintain the highest 
standard of honesty and integrity, whether by land or water. 

The practical result of the legalizing of the released bill of lading 
has been that the carrier has quoted a rate of freight which makes it 
obligatory upon the shipper to ship certain kinds of goods under 
released bill of lading, because if he does not do so in many cases he 
can not compete Avith other shippers in a similar line of business 
who avail themselves; of its provisions, while the carrier on his part 
having insisted upon a valuation of merchandise entrusted to his 
care by the shipper, which valuation is entirely inadequate and bears 
no actual relation to the actual value of the property entrusted to him 
for transportation, has actually succeeded in doing what the hnv 
expressly denies him the right to do, namely, to escape his legal 
liability" for his wrongful act, or the wrongful act of his servants. 
The result of this is that the carrier fails to protect the merchandise 
entrusted to him for carriers against damage or loss:; he fails to 
exercise due diligence in its prompt transportation and delivery, 
and, as a result losses, due to pilferage, theft, and non-delivery, have 


12 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


increased and are increasing by leaps and bounds, and have reached a 
point where they seriously menace the ability of merchants to do 
business or to ship their goods to or from ports and places in the 
world with any reasonable security that the merchandise they have 
shipped will be delivered at its destination. 

It has become to the best interests of the carrier’s employees, 
when the goods are injured, to report them as lost, and when they are- 
stolen to report that the}^ have no knowledge what has become of 
them. A merchant may ship a case of goods worth $2,000, under a 
released bill of lading, which he is compelled to accept by reason 
of competitive conditions, and in which the goods are valued at 
$100. They fail to arrive at destination, or are even stolen by the 
carrier’s agent, and the merchant’s only recovery against the carrier 
is the agreed-upon valuation. This the carrier may pay, and then 
if the goods turn up sell them at auction and receive therefor many 
times the amount paid the shipper. His dishonest agents may put 
this difference in their pockets without redress upon the part of the 
shipper; first, because he would not discover the fraud; or second.' 
because he has already accepted in full satisfaction a payment for the 
limited value and makes no further inquiry or demand. 

Surely such a. condition is contrary to every public policy and 
ought to be changed, and that speedily. Carriers should not be per¬ 
mitted to contract for exemption from any responsibility beyond that 
imposed by the common law unless such exemption is just and 
reasonable. They should not be permitted to contract in any form, 
directly, or indirectly, for exemption from responsibility for their 
own negligence or the negligence of their servants. The bill of lad¬ 
ing which the merchant is given should be uniform in terms, brief 
in language, and clear and distinct with respect to the rights of both 
carrier and shipper. 

Let me explain a little more fully the processes which have brought 
about the present dereliction of duty on the paid of many common 
carriers in failing to adequately care for and protect the property 
entrusted to their charge for transportation: 

Ordinarily, as above recited, when the carrier received goods 
from a merchant for carriage to some dther country or place he had 
to deliver those goods in like sound condition or else he had to show 
that their loss was not due to any neglect of himself or his em¬ 
ployees. In other words, he was made an insurer of those goods 
except as against the act of God or the public enemy. The reason 
for this is when the merchant shipped his goods he parted with all 
ability to care for or supervise them, and entrusted that responsibility 
to the carrier, who was in a position to care for them, as they were 
in his (the carrier’s) custody, subject to his control. 

In Great Britain, however, always jealously anxious to foster her 
merchant marine, a practice grew up, and gradually developed, 
which provides that shippers of goods and the carriers might agree 
between them that the carriers should not be responsible, either in 
whole or in part, for their own delinquencies, and such agreements 
were upheld by the courts. Thus the carrier could insist on an 
agreed valuation of the merchandise intrusted to his care which was 
very much less than its actual value, and in the event of loss the 
carrier would only pay such agreed upon valuation. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


13 


It was also held to be legal to agree upon a very restricted period 
for the giving of notice of loss. In many cases notice of loss had 
to be given before the goods were removed from the dock. You 
can readily see that it is impossible in many instances for a merchant 
to comply with such a provision. 

Specifications were also introduced in the bills of lading that the 
carrier should have the benefit of any insurance which the shipper 
might have effected on his goods. Thus in effect the common car¬ 
rier confiscated to his own use the protection which the assured had 
paid for. 

Also, the common carrier was allowed to accept bills of lading of a 
connecting common carrier which might be totally different in terms 
from the contract which he, himself, had made with the shipper, 
thus even if a shipper of goods had succeeded in securing a proper 
shipping document from his common carrier to whom he had in¬ 
trusted his goods, such common carrier might turn them over to a 
connecting common carrier, and make any bargain he pleases with 
him, and if a loss occurred to the goods while in the custody of such 
connecting common carrier, the shipper might succeed only to the 
rights granted by such connecting common carrier, which might be 
very much less than those which he contracted for with the common 
carrier with whom he had originally made his contract. 

In other words, Great Britain held to the theory that two parties 
were at liberty to make practically any contract they pleased regard¬ 
ing the transportation of merchandise by her ships. It being, I 
presume, the idea of the public authorities in Great Britain that by 
reducing the liability imposed upon her shipping to the smallest 
possible amount she would foster the growth of her mercantile 
marine. 

That this fact has proved to be erroneous is indicated by the report 
of the Imperial Commission on Bill of Lading Reforms, which has 
just been held in England, copy of which I attach hereto, from 
which you will note it is found that the present conditions regard¬ 
ing theft and pilferage on board many English ships are very bad, 
and a recommendation is made that the liability of the shipowner be 
increased. 

It has 'always seemed to me that the theory proceded on by 
England was totally wrong, and that if any nation desired to build 
up its mercantile marine it could not do better than insist that its 
ships should assume full responsibility for life and property in¬ 
trusted to her for transportation. 

To do so would, in my opinion, give her a heavy competitive ad¬ 
vantage over the ships of another nation which applied the limited 
liability theory. 

In the United States this theory of limited or reduced liability 
on the part of the carrier was not approved of for many years, but 
gradually the decisions of the courts in this country tended to confirm 
more anil more the English decisions on this point. 

In order to reaffirm the wise doctrine that the common carrier 
should be held as an insurer except as against the acts of God and 
the public enemy, and specifically to prohibit the bartering away 
of the rights of "the shipper by so-called special contracts between 
the shipper and the carrier, Congress passed what is known as the 


14 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Harter Act of February 13, 1893, 37 Statutes at Large, page 445, 
chapter 105, which deals with transportation of merchandise between 
the United States and foreign countries, and the Cummins Act, and 
its various amendments (“An act to amend an act entitled ‘An act 
to regulate commerce,’ approved Feb. 4, 1887) and all acts amenda¬ 
tory thereof, and to enlarge the powers of the Interstate Commerce 
Commission,” approved the 9th day of August, 1916, which deals 
principally with the shipment of merchandise by common carrier 
within the confines of the United States. 

The Harter Act provides specifically: 

That it shall not he lawful for the manager, agent, master, or owner of any 
vessel transporting merchandise or property from or between ports of the 
United States and foreign ports to insert in any bill of lading or shipping 
documents any clause, covenant, or agreement whereby it, he, or they shall be 
relieved from liability for loss or damage arising from negligence, fault, or 
failure in proper loading, stowage, custody, care, or proper delivery of any and 
all lawful merchandise or property committed to its or their charge. Any and 
all words or clauses of such import inserted in bills of lading or shipping re¬ 
ceipts shall be null and void and of no effect. 

The manifest purpose and intention of this was to prohibit all 
bill-of-lading clauses which admitted of the whitewashing of the 
shipowner or common carrier for his own neglect or the neglect of 
his servants. 

The courts of the United States, and of some of the States, how¬ 
ever, in the handing down of decisions have whittled away the wise 
provisions of Congress as enacted in the Harter Act so that prac¬ 
tically to-day that act is a “ dead letter ” as regards the care and 
custody of cargo intrusted to common carriers between the United 
States and foreign countries. 

If the shipowner provides a seaworthy ship in the beginning, 
under these decisions of the courts he is not now held fully respon 
sible for failing to deliver the goods in like good order and condition 
as he received them. 

I submit a digest of these decisions herewith, which show the law 
as it now exists in the United States. 

In brief the effect of these decisions is that, while the common car¬ 
rier by sea can not contract away his liability for his torts or negli¬ 
gence he can limit them to a nominal amount for a considera¬ 
tion, and that he can also by agreement with the shipper arrange 
that claims shall be presented under what has proved to be in prac¬ 
tice impossible conditions. 

The theory that freedom of contract exists between the carrier 
and the shipper, which is the theory upon which all these decisions 
seem to be based is nothing more or less than a joke, and a bad prac¬ 
tical joke at that on the merchant and shipowner. 

Freedom of contract between a merchant and shipper and a com¬ 
mon carrier has not, does not, and can not exist. 

The shipowner maintaining a transportation service is in position 
unless restrained by the strong hand of the law, to put any condi¬ 
tion he pleases in his bills of lading, and the shipper is obliged to 
accept it or else refrain from shipping his goods. 

What freedom of contract is there in such an arrangement. It is 
absolute autocracy. 

You present yourself with a case of merchandise, worth, let us say, 
$5,000 at the dock or office of a steamship company and say that you 
want the goods shipped from the United States to, say, South Africa. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


15 


The common carrier says he will be very glad to take it for you, 
but will only value it at $100, at his regular freight rates, and that he 
will only pay you $100 in the event of its being damaged or lost 
through his fault or error, and furthermore that you will have to let 
him know the full amount of your claim before you take the goods 
off the dock, and in the event of claim you will have to bring suit 
within, say, three months. 

You naturally object to any such one-sided arrangement, and then 
the common carrier says if you want to value it at the full amount 
your freight will be fixed at a rate very much higher than the regular 
freight rate—indeed, at an amount which may seriously handicap 
you in competition with your neighbor, and may, in many cases make 
it impossible for you to ship in competition with him. 

Can there be any valid argument why common carriers alone 
among individuals or corporate bodies should be allowed to escape 
the result of their own negligence, or that the courts of the United 
States should uphold them in this roundabout means of evading the 
obligations which Congress has laid upon them ? 

There is an old saying that “ The proof of the pudding is in the 
eating.” 

When the common carriers were held to their strict responsibility 
and were not allowed to indirectly evade it by means of reduced 
valuation clauses, notice of loss clauses, and various other bill-of- 
lading clauses which have been introduced by them for the express 
purpose of avoiding their full responsibility to the shipper, they 
took very good care to see that they had honest employees, and to 
enforce discipline on their vessels, and in the men engaged in load¬ 
ing and unloading cargo, but under the law as interpreted by the 
courts at present it is very much cheaper for them to pay the small 
nominal damages, provided in the released bill of lading, in the 
event of a claim, rather than put in effect an adequate system of 
supervision and care, which would result in the elimination of the 
theft, pilferage, breakage, and nondelivery which is now sustained 
by merchants who are forced to ship under the various terms of the 
released bill of lading or not ship at all. 

It is pertinent to consider the claim frequently made that the 
carrier, being in ignorance of the contents of cases or bales tendered 
to him for shipment, should not be held to pay for a value which 
has not been declared to him by the merchant. 

With this contention I am in full and complete accord. The 
carrier should receive pay for three things: 

First. The physical cost of transporting the merchandise intrusted 
to him; 

Second. The cost of liquidating his liability to make full com¬ 
pensation for losses to such merchandise which occurred while in 
his custody; and 

Third. He should receive an adequate profit on the whole trans- 


As regards the second obligation, somebody will, no doubt, say 
that provided the merchant is insured by some insurance company 
for these losses, why should the carrier be asked to assume them, 
and the answer is because the carrier can assume them at a less cost 


16 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

than can the insurance company, and consequently it is to the public 
interest to have the carrier assume them rather than the insurance 
company. 

All that an insurance company can do is to adjust its rate so as 
to receive a premium adequate to make good the loss sustained by 
the assured, while the carrier having within his own control the 
means to reduce or avoid all losses other than those caused by the 
act of God or the public enemy can reduce his rate to a very much 
less sum than can any insurance company. 

The old apportionment of responsibility between the carrier and 
the insurance company should be restored, namely, that with certain 
limited exceptions the carrier was an insurer of the goods except 
as against the act of God and the public enemy, while the insurance 
company issued its policy to protect against the act of God and 
the public enemy. The two together giving the merchant perfect 
protection. 

In the past some shippers have been found who favored the issu¬ 
ance of a released bill of lading on the ground that they could get 
a cheaper freight rate. I do not know whether there are as many 
gentlemen who hold to this opinion to-day as there were some years 
ago on account of the high insurance rates which necessarily ensued, 
but whether there are merchants who still cling to this opinion, or 
whether there are not, it seems to me as unwise to allow such a con¬ 
tract as it would be to allow the merchant to pay his liabilities with 
a reduced valued dollar, and for the same reason because as bad 
money drives out good, so does a bad bill of lading drive out a good 
bill of lading. 

Nor will the reimposing of full liability upon the common carrier 
work any permanent hardship upon him. There will, of course, be 
a temporary hardship while he is weeding out his dishonest em¬ 
ployees and while he is adjusting his freight rates to a somewhat 
slightly increased liability which has been reimposed upon him, 
but I would point out that shipowners in the past and at the present 
time insure this liability either with an insurance company or with 
mutual inter insurance clubs, and they can continue to cover this 
liability at a slightly increased premium, which increased premiums, 
in my view, will be speedily reduced, owing to reduced losses. 

I would, therefore, urge upon this committee that they so amend 
the Harter Act that it shall no longer be lawful for the common 
carrier to demand or for the shipper to assent to any bill of lading, 
shipping document, private contract, covenant, or agreement whereby 
the carrier shall be relieved from liability for loss or damage aris¬ 
ing from negligence, fault, or failure in proper loading, stowage, 
custody, care, or proper delivery of any and all lawful merchandise 
or property committed to its or their charge, nor for any sum less 
than the full actual amount of such loss or damage, and whether the 
merchandise and property has been shipped at a reduced rate of 
freight or not or at an agreed-upon value which is less than its actual 
value, and that any or all clauses of such import inserted in bills of 
lading or shipping receipts shall be null and void and of no effect, 
and that in the event of loss or damage the burden of proving 
freedom from negligence shall be upon the vessel and her owner. 

While, as regards the making of claims for loss or damage, notice 
of all claims for loss or damage visible from a superficial examina- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 17 

tion of the merchandise or of the barrel, box, bale, package, or other 
container holding the same shall be given the carrier before removal 
from the dock, and notice of all claims for loss or damage discover¬ 
able only by opening the barrel, box, package, bale, or other con¬ 
tainer shall be given the carrier within a reasonable time after the 
delivery of the merchandise to the receiver thereof, such reasonable 
time being determined by the nature of the merchandise transported 
and the circumstances of each case. 

The foregoing remarks apply, as you will note, principally to 
shipments by sea between the United States and foreign countries, 
although many of the subjects dealt with apply also to shipments by 
land within the confines of the United States. 

Shipments by sea are affected and come under the legislation 
provided by the Harter Act. Shipments by land are affected by 
and come under the jurisdictionxof the law as provided by the Cum¬ 
mins Act. This is an act to amend an act entitled “An act to regu¬ 
late commerce,” approved February 4, 1887, and all acts amendatory 
thereof, and to enlarge the powers of the Interstate Commerce Com¬ 
mission, approved August 9, 1916. 

The provisions of that act are, no doubt, well known to this 
committee, but in brief the Cummins Act provides that where the 
goods were hidden from view by wrapping, boxing, etc., the carrier, 
not being able to discover the character of the goods, and the car¬ 
rier's liability would not then extend beyond the amount so speci¬ 
fically stated. 

The Cummins Act of 1915 made a number of radical changes in 
the law of liability applicable to interstate transportation, jjnder 
the laws that existed before the Cummins amendment a common car¬ 
rier in an interstate shipment could not limit its liability for its own 
negligence, but it could, by agreement with the shipper fairly entered 
into, limit the amount of its liability, whether caused by negligence 
or not. In other words, a shipper could undervalue his shipment in 
order to obtain a lower rate, provided it was agreed that transporta¬ 
tion companies’ liability in the event of loss would be limited to the 
value given. Such an arrangement was approved by the Federal 
courts. 

The Cummins amendment in terms prevented the making of such 
an agreement, and provided that such a contract was unlawful, and 
that, notwithstanding any limitation, the shipper might recover the 
full value of the article where the loss Avas “ caused by it ” (the 
carrier). The quoted clause is the same as appears in the Carmac 
amendment, and has been construed to fix the liability of the carrier 
as it was at common law, which was a liability whether caused by the 
carrier’s neglect or not, and not occasioned by the act of God or the 
public enemy or the inherent nature of the goods; but provided, 
however, that a carrier might limit its liability for a loss not due to 
his neglect by a fair and reasonable agreement based upon a proper 
consideration, usually a reduced rate. 

The Cummins amendment act of 1916, amending the act of 1915, 
again changed the law and made certain changes and provided cer¬ 
tain exemptions, as follows: 

First. Baggage carried on passenger trains and boats carrying pas¬ 
sengers are not within the Cummins Act. 

60682—21-2 


18 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Second. Property, other than baggage, concerning which the car¬ 
rier has or shall be authorized or required to establish rates depend¬ 
ent upon values declared by the shipper or agreed upon in writing 
as a reasonable value of the property, is not within the Cummins Act. 

Third. Ordinary live stock received for transportation is within 
the Cummins Act. 

Fourth. Property received for transportation concerning which 
the carrier has not been or shall not thereafter be authorized or 
required to establish rates dependent upon values declared by the 
shipper or agreed upon in writing as the value of the property is 
within the Cummins Act. 

Fifth. Live stock, such as is chiefly valued for breeding, racing, 
show purposes, or other special uses, is not within the Cummins Act. 

Accordingly, as to classes 1, 2, and 5, the law is exactly as it was 
prior to the Cummins amendment, and this prohibits the carrier 
from exempting itself from liability for its negligence by any agree¬ 
ment, but permits the carrier to limit the amount of its liability by 
an agreement with the shipper fairly entered into and based upon a 
reduced rate. As to classes 3 and 4, no agreement can be made be¬ 
tween the carrier and the shipper which will limit the liability of 
the former or release it from the payment of the full value of the 
property in case of its loss or destruction. 

There have been no adjudged cases which we regard as authorita¬ 
tive since the amendment to the Cummins amendment August 9, 
1916, and what the decision of the Supreme Court of the United 
States would be upon an agreement between a shipper and carrier 
limiting the carrier’s liability for a definite amount is not possible 
to say. The probabilities are that if the agreement was supported by 
a definite consideration, such as a reduced rate of freight, it would 
be upheld. 

Although the losses by theft and pilferage on merchandise shipped 
by common carriers within the confines of the United States are not 
as heavy in proportion to those shipped by sea, they are quite heavy 
enough. 

In 1916 this company paid losses of $104,301.43; 1917, $441,868.59; 
1918, $1,302,671.64; 1919, $263,027.39; 1920, $74,689.27. 

This is by rail within the United States, gentlemen. 

Owing to the heavy losses sustained in 19l8 and 1919, this company 
heavily reduced its insurance on merchandise by rail and express in 
the United States, with the result that for the whole period men¬ 
tioned it received a premium of $1,066,686.47 and paid net losses of 
$2,186,558.32. 

I am not prepared to testify that all these losses were caused by 
theft and pilferage, because the usual claim was that the goods had 
never turned up, but it is safe to say that between 85 and 90 per cent 
were due to theft, pilferage, and/or nondelivery. 

In my view the arguments which have been recited in the foregoing 
memorandum regarding the impropriety of allowing the common 
carrier by sea to reduce or escape his liability by reason of an agree¬ 
ment made with the shipper apply with equal validity to claims for 
loss within the United States. 

There is this difference to be noted, however: The carrier by sea 
is free to fix his own freight rates; railroad and express companies 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 19 

in the United States are under the jurisdiction of the Interstate 
Commerce Commission and are not so free, but that does not alter 
the hardship to the merchant or shipper of goods by railroads in 
the United States. 

I would, therefore, suggest that the Cummins Act be amended 
so that where losses due to negligence occur to property delivered 
by common carrier, railroad, or transportation company the burden 
of proving freedom from negligence shall be upon the common car¬ 
rier, railroad, and transportation company. IVhere such loss, dam- 
age, or negligence results from the negligence of the common carrier, 
railroad, or transportation company it shall be liable for the full 
actual loss, damage, or injury. It shall not have the right to limit 
the amount of recovery against it by reason of any declared or 
released value of such property. 

The carrier should then be empowered to demand statement of 
value of merchandise transported by the shipper, and such value 
should be taken into consideration in adjusting the rates for trans¬ 
portation. 

In conclusion I would like to say that I do not wish to be under¬ 
stood as claiming that all the losses sustained by merchants in the 
shipment of goods, whether by land or sea, are due to theft occur¬ 
ring while the goods are in the custody of the common carrier. Some 
of these thefts occur while the merchandise is still in the hands of 
shippers and prior to delivery to the common carrier. 

A still larger amount occur from thefts in customhouse sheds and 
warehouses in foreign countries, especially in Latin America, and 
some of them occur while they are in the custody of private truck¬ 
men of the shipper or the consignee, but the experience of a number 
of years has convinced me that the greatest proportion of all occur 
while the goods are in the custody of the common carrier, and if 
the responsibility of the common carrier to make good in full 
such losses was restored that these losses would rapidly and steadily 
diminish, both in number and amount, and to the extent that they 
are diminished the present handicap on commerce due to such losses 
would be lightened or removed. 

Now, Mr. Chairman, I submit herewith a statement which I have 
cut out, under date of last Friday, from the Journal of Commerce, 
in which it says that the claims against the railroads in 1919 reached 
the sum of $109,000,000. I also submit the rates of premium, to which 
I referred in my statement, which were charged by this company; 
also a statement or digest of decisions showing the law of common 
carriers in the United States; also the findings of the imperial ship¬ 
ping committee and their report on the limitation of shipowners’ 
liability; and also a proposed amendment to section 1 of the Harter 
Act of February 13, 1893, 37 Statutes at Large, page 445, chapter 105. 

(The papers submitted by Mr. Rush will be found at the conclusion 
of his statement, with the exception of the report of the British Im¬ 
perial Shipping Committee, which appears as an appendix to these 
hearings.) 

Mr. Lehlbach. Mr. Rush, in amplifying your statement, I would 
like to ask questions on points that you have covered, as to which it 
seems to me it might be valuable to bring out the information more 
in detail. 


20 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Do you believe that water carriers should be permitted to stipulate 
in their bills of lading that the carrier shall not be responsible for 
loss caused by heat, shrinkage, drainage, sweat of any kind or origin, 
leakage, loss of contents or weight? It has been contended that the 
inclusion of these sources of loss would appear to relieve the company 
of responsibility for the careful handling and stowage of cargo. 

Mr. Rush. If such losses are due to their own negligence, they 
should be responsible for them. The whole question hinges on their 
own negligence and the negligence of their servants. For instance, if 
they take a shipment of butter and sto\y it next to the boiler, and a 
loss results, the carrier should be responsible for that loss. 

Mr. Lehlbach. Do you believe, in your judgment, before the law 
had been construed, that was a violation of the Harter Act? 

Mr. Rush. Yes, sir. 

Mr. Lehlbach. Do you believe that water carriers should be per¬ 
mitted to stipulate this provision in their bills of lading—that the 
carrier, at its option, shall have all rights and benefits granted to 
shipowners limiting, or permitting a limitation of, their liabilty by 
the laws and/or customs of any other State and/or country into a 
port of which said vessel may enter, or at which she may touch, 
and/or in which said vessel may be attached or libeled, or carrier may 
be sued, or any loss and/or damage to said merchandise? 

Mr. Rush. It would seem to me that the law of the United States 
should be paramount, sir; and whenever that carrier contracts with 
a United States merchant, he should settle with the merchant or de¬ 
liver the goods. 

Mr. Lehlbach. No matter where the loss may occur? 

Mr. Rush. It should attach; no matter where the loss may occur, 
I believe the United States law should apply and I believe it will 
apply. 

Mr. Lehlbach. How about this: Do you believe that water car¬ 
riers should be permitted to stipulate in their bills of lading that 
any omission to exercise due diligence shall not be presumed, but 
the same must, if claimed or alleged, be proved by the shipper? You 
have already touched on that, but will you elaborate a little further 
on that? 

Mr. Rush. The theory is this- 

Mr. Lehlbach. Why should not the burden of proof be on the 
plaintiff in this case, as in others? 

Mr. Rush. The merchant has to prove the goods were in good con¬ 
dition, and if he proves they were in good condition when delivered 
to the carrier and they are delivered in a damaged condition, then 
the responsibility should rest on the carrier of proving how they got 
damaged. If he is able to prove they were lost because of perils of 
the sea, by force majeur, or acts of a public enemy, he is relieved; but 
if he does not prove that, then he is responsible. 

Mr. Lehlbach. If legislation is recommended, such as amend¬ 
ment of the Harter Act, do you agree with the Imperial Shipping 
Committee of Great Britain, as stated in its report, that due re¬ 
gard for elasticity should be given at two points, namely, ( a ) as to 
new and exceptional articles, voyages, and methods of carriage, 
and (&) curtailment of liability in exceptional circumstances; or 
do you believe that the liability imposed should be the same under 
all circumstances? 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 21 

Mr. Rush. It is very hard to be a prophet of what is going to 
happen in the future. I think the best way to do is to pass a law 7 
which will apply to everything; then, when an exception comes up, 
such, for instance, as a shipment of some kind of goods that has 
never been made before, it can be dealt with by the courts as they 
go along. 

Mr. Lehlbach. Would, in your opinion, strict liability under 
all circumstances act as a deterrent to new ventures? 

Mr. Rush. No, sir; I do not think so, provided you get paid for 
doing it. 

Mr. Lehlbach. Do you think that the situation w r ould be ade¬ 
quately met by providing a reasonable maximum value as a limit 
of liability for damage, or several maximum limits for the various 
trades ? 

Mr. Rush. My personal belief is that a man ought to be able to 
collect in full from the common carrier, just the same as from 
any tort feasor. As a matter of practice, in the past carriers used 
to have regular classifications of goods, quite a number of them; 
and in practice it worked out fairly satisfactorily, provided those 
values were approximately the values of the goods, which were, 
of course, rising and falling all the time. But I do not see any 
reason why a common carrier should not pay in full, any more 
than you or I, for whatever damage we may cause. 

Mr. Lehlbach. It has been suggested difficulty might arise as to 
the determination of the point at which the damage or loss may 
have occurred; for example, where the shipment is from warehouse 
to warehouse and it has developed there is nondelivery, and it is 
difficult to ascertain at what point loss occurred, or theft, if it is 
the result of theft. What suggestion have you to make on that ? 

Mr. Rush. The position I take is this: As between two parties, 
one absolutely innocent and one who may be either innocent or 
guilty, the absolutely innocent person should have the first call. 
The merchant is not responsible for that loss; one of those carriers 
is. Make the delivering carrier, who is the man to whom the 
merchant can look, responsible and let him go back on the next one 
until it is found. 

Mr. Lehlbach. Aside from the remedy by legislation as you sug¬ 
gest, do you believe any substantial improvement can be accom¬ 
plished from cooperative methods between the three groups of in¬ 
terested parties—the shippers, shipowners, and underwriters? Do 
you think that is feasible ? 

Mr. Rush. Not until the law is changed to give the shipowner 
an interest to so cooperate. 

Mr. Lehlbach. Do you think it is practicable to have two bills 
of lading—(1) an insured bill of lading, under which a shipper, in 
exchange for reasonable guaranties as to packing, etc., shall receive 
protection against all loss that may result; or (2) a form of bill 
of lading under which there shall be no responsibility upon any¬ 
one except the shipper, and he takes his own chances on methods 
of pocking and transportation? 

Mr. Rush. I do not quite understand the question, Mr. Chair¬ 
man. You mean that the shipowner is to issue a bill of lading to 
the shipper, under which he, the shipowner, undertakes to insure 


22 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


the goods against all risks, or does he place that risk with some in¬ 
surance company ? How is that worked ? 

Mr. Lehlbach. No; the shipowner, upon receiving reasonable 
guaranties from the shipper that his goods are properly packed 
and safeguarded against loss, as far as he is able, assumes the full 
responsibility for any loss in transporting, except from the act of 
God or a public enemy—that kind of a bill of lading that you have 
suggested here in your statement? 

Mr. Rush. That is exactly the thing- 

Mr. Lehlbach. Now, do you believe it is possible to have that 
kind of a bill of lading, and also to provide a released bill of lading 
which leaves the responsibility up to the shipper for the transport 
and divests the carrier from any liability as to what happens to the 
goods in transport, and he receiving merely a sufficient freight 
charge that would cover the transport charges and nothing else, 
and leaving the shipper to elect in which Avay he wishes to ship? 

Mr. Rush. It would be extremely unwise and absolutely contrary 
to public policy for the reason I have recited, namely, that a bad 
bill of lading would drive out a good bill of lading. That is prac¬ 
tically the condition Avhich exists to-day. 

Mr. Lehlbach. Have you any other suggestions to offer for im¬ 
proving the situation, except as you have set forth in your state¬ 
ment ? 

Mr. Rush. Perhaps I had better give a little resume of the Harter 
Act. It is a little bit before the time of the gentlemen of the com¬ 
mittee here to-day. 

Mr. Lehlbach. I think most of us have read it. even recently. 

Mr. Rush. In brief, Congressman Michael D. Harter, who was a 
miller in Ohio, had some bad losses on the flour he shipped. The 
old man was hot under the collar, and he went to work to put into 
code what was already case law of the United States, and he got a 
law whereby he thought the common carrier could not be allowed to 
duck from under his liability. Representatives of the common car¬ 
riers went to Mr. Harter, who was a good miller and a good Con¬ 
gressman but a poor lawyer, and they said, “ Now, you do not want 
anything unreasonable, do you?” And he said, “No.” And they 
said, “If we furnish you with a perfectly seaworthy ship, that is 
all right ? ” He said, “ Of course.” They thereby succeeded in 
putting in the Harter Act a release of liability which was greater 
than that existing at that time, and Michael Harter never knew they 
had done it. The Harter Act provided: 

That it shall not he lawful for the manager, agent, master, or owner of any 
vessel transporting merchandise or property from or between ports of the 
United States and foreign ports to insert in any bill of lading or shipping 
document any clause, covenant, or agreement whereby it, he, or they shall be 
relieved from liability for loss or damage arising from negligence, fault, or 
failure in proper loading, stowage, custody, care, or proper delivery of any and 
all lawful merchandise or property committed to its or their charge. Any and 
all words or clauses of such import inserted in bills of lading or shipping re¬ 
ceipts shall be null and void and of no effect. 

Despite that, they illegally put clauses in the bill of lading allow¬ 
ing the carrier to eliminate legal responsibility. The courts of the 
United States and of various States, notably New York, while up¬ 
holding the principle that the carrier can not contract himself out 
of his liability, have wiped the sponge over the whole slate by saying, 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 23 

While you can not get rid of your legal responsibility, you can re¬ 
duce it to a nominal sum,” thereby voiding the exact purpose of 
the Harter Act enacted by Congress. 

My view is, the first thing to do is to restore that act and then 
the courts of the United States presumably will be required to con¬ 
strue that act as it was originally intended—to give the shipper pro¬ 
tection. That, to my mind, is the first thing. 

I have gone in past years very deeply into the question of the 
shipper’s packing, into the time of delivery, truckman’s liability, 
and all that sort of thing, and I have never yet been able to get any 
scheme of packing, short of having a man with a gun sitting on top 
of the goods, that gets away from these thieves. The only people 
who can handle that are the shipowners, who are there and have the 
stuff in custody, either on their vessels or on their docks. It is pos¬ 
sible for the shipowner to do that, and he ought to do it, and he 
ought to be paid for doing it; and, in my judgment, that is the only 
way for it to be done. 

If this law is passed, there will be, of course, certain improve¬ 
ments in packing. The shipowner will insist on it. At present he 
does not care very much whether the goods are packed in paste¬ 
board cartons or packed with good stuff, because it is the shipper’s 
loss and not the shipowner’s. It is purely, in my mind, first and 
foremost, a question of getting the liability of the common carrier 
back to what it had been for two centuries and a half, and when 
that is done the other things will follow. 

Mr. Lehlbach. What have you to suggest as to any increase of 
the liability of common carriers for negligence imposed upon our 
• carriers by law constituting an additional burden to those carriers at 
a time when we are seeking to promote our merchant marine and 
enable them to compete ? 

Mr. Rush. We used to insure goods for all carriers to Great 
Britain at 2^ cents, which is a nominal rate. It is not enough to 
hurt anybody, and I do not see why we should not be able to do it 
again if he can get honest aids. I think if the carrier advertises 
that he assumes full responsibility for all merchandise shipped by it 
I could and would make a preferred rate on that carrier, as against 
others, if I thought I could get my full recovery from him. 

Mr. Lehlbach. Have you experienced any great difference as 
between carriers as to the volume of claims for loss resulting from 
theft, breakage, and nondelivery? 

Mr. Rush. There is a difference; yes. Some of them are a great 
deal better than others. 

Mr. Lehlbach. And have you experienced such a difference as 
between various foreign markets; is there a greater claim for loss 
in some foreign markets than there is in others? 

Mr. Rush. Latin-America is the worst one. I have been informed 
that the regular dockman on the docks of Callao, whose wages are 
$2 a day, pays about $2,000 a year for the privilege of working 
there. 

Mr. Lehlbach. To what do you attribute the difference as be¬ 
tween carriers as to the amount of losses sustained in this line? 

Mr. Rush. Some common Carriers have a reputation that they like 
to keep up, and the reputation of the line is worth a great deal to 
them. The Ward Line is one of them—it is now called the New York 


24 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

& Cuban Mail. They do the best they can, and the Cunard Line do 
the best they can. The first-class carriers, I think, want to deliver 
their stuff in good condition. 

Mr. Lehlbach. And the difference in losses at foreign ports, I 
suppose, is due to national honesty ? 

Mr. Rush. One of our surveyors went down to Cuba not so long 
ago. He was there a few months, and when he came back he stated 
he could have made $100,000 in that time by improper viseing of 
claims for goods as stolen that he could lay his hands on. 

Mr. Lehlbach. I take it such conditions do not generally obtain 
in European ports or our American ports ? 

Mr. Rush. No, sir. They are not as bad anywhere else as in Latin- 
America. The rates there are 6, 7, and 8 per cent. 

Mr. Lehlbach. Does any member of the committee or any repre¬ 
sentative of the Shipping Board sitting with the committee, Mr. 
Lissner or Mr. Gaines, desire to ask any question ? 

Mr. Campbell. Would you ask Mr. Rush just this one question 
for me ? 

Mr. Lehlbach. What rate of premium did you charge for theft and 
pilferage during the 10 years prior to 1914? 

Mr. Rush. It varied a great deal, depending on where the goods 
were going and where they were coming from. To Europe it was 
generally very low; to South America it was high, but not as high 
as it is now. 

Mr. Campbell. I would like to have the figures if I could, because 
he has given the figures so far. Give the percentage or something. 

Mr. Lehlbach. Have you the figures with you ? 

Mr. Rush. No, sir; because it was so slight I did not bother to keep’ 
them. 

Mr. Edmonds. You mean the difference between the rate to-day and 
the rate then was slight? 

Mr. Rush. No, sir; the rate for theft and pilferage then was 
nominal. 

Mr. Edmonds. You could furnish us with a statement of what they 
would run 10 years ago, could you not? 

Mr. Rush. It would be a nominal rate, Mr. Edmonds; it was so 
small we would not keep the account separately at all. 

Mr. Edmonds. You can. furnish us with an estimate? 

Mr. Rush. I can give you the rate. 

Mr. Edmonds. Has it ever been the custom in any country—this 
country or any other country—for the shipowner to accept the lia¬ 
bility and then do whatever insuring was necessary himself? 

Mr. Rush. Certain coastwise lines, sir, used to have what they 
called a cargo cover; that is, they themselves would place insurance 
on their cargoes and then they would pay such claims as that in¬ 
surance covered. They never paid all claims, but paid such claims as 
that insurance covered. That was done for convenience to the ship¬ 
pers. It has never prevailed in the off-shore traffic. 

Mr. Edmonds. I have been informed in England a cargo carrier 
does his own insuring against pilferage and covers it in the freight 
rate. Is that true? 

Mr. Rush. I am not prepared to testify with regard to P. & I 
except I know the foreign steamship owner does insure his legal lia¬ 
bility—such liability as is imposed upon him by the laws of liis conn- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 25 

try—in mutual clubs and in Lloyds and elsewhere. That is what I 
referred to in my statement, that for the liability which he has in his 
bill of lading he is covered by insurance. 

Mr. Edmonds. Do they have that same limiting of liability in Eng¬ 
land that they have here ? 

Mr. Rush. Much more so. 

Mr. Edmonds. You mean the contract is recognized by the courts 
between the shipowner and the shipper? 

Mr. Rush. Yes, sir. 

Mr. Edmonds. And they can limit their liability to anything they 
want? 

Mr. Rush. Pretty much; not for murder or anything of that kind. 

Mr. Edmonds. I have not read this report of the commission- 

Mr. Rush. That will give you the full particulars. 

Mr. Edmonds (continuing). But does that report of the commis¬ 
sion correct that situation? 

Mr. Rush. That is intended to correct it. It is pretty near as bad 
in England as it is here. 

Mr. Edmonds. Do you understand this report has been put into 
operation ? 

Mr. Rush. No, sir; I do not understand that yet. It is a recom¬ 
mendation. 

Mr. Edmonds. A recommendation to the board of trade ? 

Mr. Rush. The chairman of the imperial commission is the man 
w T ho gets the recommendation, and I presume he will report to Parlia¬ 
ment. 

Mr. Edmonds. It is subject, then, to an act of Parliament? 

Mr. Rush. I suppose so. 

Dr. Huebner. Has not the imperial British shipping committee re¬ 
ported that the fixing of nominal values by agreement should be pro¬ 
hibited by law ? 

Mr. Rush. I think it so states in the recommendation, sir. 

Mr. Lehlbach. Do you think the question is of sufficient im¬ 
portance that the nation that first succeeds in devising methods to 
check this loss and waste will gain any decided advantage in hand¬ 
ling the shipping of the world ? 

Mr. Rush. Yes, sir; I think you will always gain by common 
honesty. I have never known it to fail. Here are men in the employ 
of carriers—understand me, I do not believe the common carriers 
countenance this theft at all; they do not get anything out of it, but 
their employees do and they all think it is a kind of perquisite they 
can get, and they can dress their families in silk shirts and silk stock¬ 
ings, and they can get anything they want out of it and nobody is 
going to hold them up. 

Mr. Edmonds. Of course, if an insurance rate of 10 per cent against 
pilfering, or even 5 per cent, could be reduced to 1 per cent, it would 
mean you could land your goods very much more cheaply in the 
country to which they are shipped ? 

Mr. Rush. Very much cheaper. If I may call the attention of 
the committee to the rates on the rate sheet, they will find it very 
illuminating as to the classes of goods most likely to be stolen, and 
the rates charged to the various ports throughout the world, and 
they can see how high they are. 


26 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Edmonds. And even that high rate is not leaving you any 
profit in the business ? 

Mr. Rush. No ; it is not. I do not believe in Latin-America; it is 
possible to keep up with it; and in Europe, every one of the rates is 
getting so high as to be a very heavy handicap on trade. 

Mr. Lehlbach. Have you experienced much loss from sabotage 
and the driving of hooks into perishable commodities and the break¬ 
age of packages ? 

Mr. Rush. No, sir; not from my experience. They will drive a 
hook into a package and rip off the boards to see what is in there and 
whether it is something they care to steal; but they are careful not to 
damage any goods, because then they would have no value when they 
went to sell them. 

Commissioner Lissner. You gave some figures about the percent¬ 
age of losses on water shipments ? 

Mr. Rush. Yes, sir. 

Commissioner Lissner. Have you any comparative figures of per¬ 
centage losses of rail carriers for the years 1916 to 1921 ? 

Mr. Rush. I have not, sir; because we have not been able to dis¬ 
tinguish the causes of the losses. The stuff simply vanished and the 
claim came in to us from the merchant, say, in New York, Chicago, 
or somewhere else, that three cases of stockings had not arrived, and 
we sent a tracer out to the railroad and fussed over that thing for 
three or four months and then it would go up like a puff of smoke; 
he could not find it. We believed it to be theft, but we could not 
show it and could not put it down as theft, and so we simply said 
that was a loss in transit. Now, in 1918, the business got so bad— 
that is, the time when the congestion came on—we just turned down 
that line and said we could not take any more. In 1919 we were 
paying losses hanging over from 1918, and in 1920 we were getting 
salvages back from the carriers; but it did not go far enough in the 
ocean-going field where it paid us to handle this thing. 

Commissioner Lissner. Does the usual form of policy you issue 
cover warehouse to warehouse, or what limitations do you put on it ? 

Mr. Rush. It usually covers warehouse to warehouse. 

Commissioner Lissner. Can you express an opinion as to where the 
greater loss on these items occurs, or what the proportion is as be¬ 
tween rail and water? 

Mr. Rush. If you ask me as to shipping to the eastern coast, of 
course my answer is it mostly occurs from the time it is shipped, we 
will say, in London, to the time it is delivered by the carrier to the 
insured on the eastern seaboard. That is in the case of the water 
carrier. If it is shipped to the interior of the country, it may occur 
in both places, and until there is some means of examining and check¬ 
ing up, to see whether your case which is delivered by the Cunard 
Line and piled up on the wharf is whole when the case is delivered 
to the Pennsylvania Railroad, you can not cover it. 

Commissioner Lissner. My question is whether you have any opin¬ 
ion as to that. 

Mr. Rush. My idea is it really occurs on the docks and in lowering 
it into the holds of the steamers. I have known of cases where in 
loading a vessel the thing would be taken up on the boom and swung 
out, and instead of being swung into the vessel, so as to be carried, 
the boom would be swung clean across the vessel and the goods low- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


27 


ered into a lighter down on the other side, and yet when it got to 
destination it would apparently be a loss while in their custody, and 
it would be a loss while in their custody, and the officers and masters 
ought to have seen it did not go too far over and that it went down 
into the hold. 

Commissioner Lissner. Of course, you insure a great many ship¬ 
ments by rail only? 

Mr. Rush. Yes, sir. 

Commissioner Lissner. What is the comparison, if you can state it, 
for loss from these causes on rail shipments as compared with water 
shipment only? 

Mr. Rush. I can only give you my impression, Mr. Lissner, that 
the water is a good deal worse. The Cummins Act is not so wide open 
as the court’s construction of the Harter Act. The railroads do have 
to pay a bigger proportion of their liabilities than the ocean carrier 
does; consequently, they do take more care with it. That is my 
impression. I have no figures to justify that, sir, because, as I say, 
I dropped out of the business in 1919. 

Dr. Huebner. Does the railroad bill of lading contain as many 
exemption clauses as you find in the average water bill of lading? 

Mr. Rush. Certainly not, sir; they would not be allowed to. 

(The matter previously referred to is as follows:) 

SEEK TO REDUCE RATE FREIGHT LOSS-CLAIMS AGAINST ROADS IN 1020 REACHED 

$109,000,000'-AISHTON SAYS 21 PER CENT OF LOSS WAS DCE TO THEFTS-COOP¬ 
ERATION AND GREATER CARE TO BE SOUGHT-COMMITTEE TO WORK OUT PLAN. 

Immediate action to secure greater care in the packing and handling of 
freight so as to eliminate the huge annual loss to the railroads of the country, 
placed last year at $109,000,000 was mapped out at a meeting of the protective 
section of the American Rad way Association held yesterday at the Hotel Penn¬ 
sylvania. The appointment of a committee was determined upon as the best 
means of bringing together all of the facts and suggestions which might aid in 
the movement to save the carriers money on claims. 

Some of the suggestions which were made yesterday included closer coopera¬ 
tion between the railroads and the Federal authorities, more prompt reports 
on loss when noted, and a strict surveillance of auction rooms where stolen 
material is sometimes placed for sale. In the course of his remarks at the 
meeting yesterday, W. W. Atterbury, vice president of the Pennsylvania Rail¬ 
road, pointed out that total loss to the carriers through freight claims last 
year amounted to approximately $109,000,000. It. H. Aishton, president of the 
American Railway Association, stated that of this total as high as 21 per cent 
represented losses to the roads through thefts and robberies. 

During the course of the afternoon session it was pointed out that from 
September last year until March of this year there had been losses to the 
railroads through theft alone of something over $3,000,000 worth of goods. 
Allowances must be made, however, for the fact that the cost price of mate¬ 
rials, which is figured in the claims lodged against the roads, has risen con¬ 
siderably during the past few years. It is understood that the losses to the 
roads last year were a new high record. 

With the appointment of a committee of railroad men it is expected that 
some definite action will be brought to the attention of the American Railway 
Association in the comparatively near future. Unlocated losses of entire pack¬ 
ages and concealed losses, together with methods of receiving freight, were 
discussed by the 126 members of the protective section of the association present 
at the meeting yesterday. A suggestion was made for the creation of terminal 
police associations in the larger cities to work with the association. 

A more uniform method of handling witnesses with expenses for obtaining 
evidence and other kindred matters were discussed. It was contended that 
an educational campaign should be instituted to teach shippers the importance 
of crating and freighting their goods in a more serviceable manner and in 
stronger containers to avoid their being broken into. It was urged by some 


28 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


of the members that robberies of freight he first reported to the local police by 
the railroad agents or other employees instead of to railroad officials. 


Ocean marine business—Rates for theft and pit [era ye on and after Mar. i, 1921. 



Class 1. 

Class 2. 

Class 3. 

Class 4. 


Re¬ 

leased 

bill 

of 

lading. 

Full 
liabil¬ 
ity as¬ 
sumed 

t>y 

carrier. 

Re¬ 

leased 

bill 

of 

lading. 

Full 
liabil¬ 
ity as¬ 
sumed 
by 

carrier. 

Re¬ 

leased 

bill 

of 

lading. 

Full 
liabil¬ 
ity as¬ 
sumed 
by 

carrier. 

Re¬ 

leased 

bill 

of 

lading. 

Full 
liabil¬ 
ity as¬ 
sumed 
by 

carrier. 

United TCingrlom and Ireland. 

\ 

1 

1 

5 

x 

10 

3 

20 

2 

40 

France , . 

15 

4 

4 

i 

224 

224 

224 

| 

2 

I 

3 

674 

674 

674 

21 

3 

Holland . 

15 

1 

| 

24 

3 

Belgium . 

4 

4 

1 

15 

2 

§ 

Germany: 

Ports . 

3 

8 

f 

224 

i 

24 

34 

2 

1 

5 

Interior. 

14 

4 

1 

11 

60 

6 

Denmark. 

Norway.j 

1 8 

30 

3 

11 

Sweden. 

1 



Spain . . 

} * 

30 


50 


f 


21 

Portugal. 

4 

2 

4 

Italy. 

1 

4 

1 

14 

3 

f 

14 

30 

34 

5 

2 

64 

7 

4 

Czech nslovaki a. 

2 

3 

4 

Switzerland . 

1 

224 

1 

4 

3 

14 

5 

90 

4 

1 . 80 

Austria,. 

2 

14 

1 . 20 

2 

7 

4 

Greece . 

1 

60 

2 

4 

24 

24 

6 

4 

Turkey. 

1 

1 

60 

2 

1.20 

4 

6 

4 

Rumania. 




Serbia . 

1 . 

60 


1.20 

4 

24 



Montenegro. 

1 

2 

6 


Bulgaria. 

J 








Poland: 

Ports. 

1 

60 

14 

SO 

24 

1.80 

14 

24 

24 

5 

24 

34 

4 

Interior. 

2 

14 

3 

1. 80 

7 

Asia Minor. 

1 

60 

2 

1. 20 

4 

6 

North Africa. 

1 

60 

14 

90 

3 

1.80 

5 

3 

British Africa—West, South, and 
East (direct). 

3 

224 

60 

4 

14 

30 

f 

3 

45 

If 

5 

f 

34 

34 

Arabia. 

1 

80 

1.75 

Persia. 

1 

1 

60 

14 

80 

3 

1.75 

30 

5 

India. 



Ceylon. 

/ 4 

5 

8 

20 

f 

3 

674 

Straits Settlements: 

Indo-China. 

) 

4 


20 

3 

4 

30 


674 

Java... 

/ 4 

3 

8 

3 

Sumatra. 

l 








China. 

l \ 

15 

i 

224 

1 

3 

3 

674 

Japan. 





Siberia, ports only. 

1 

60 

14 

7 

8 

J, 

90 

20 

10 

3 

1.80 

30 

20 

5 

34 

1 

3 

674 

40 

1 

1 

674 

674 

90 

1.80 

1.20 

9 

Philippines. 

4 

1 

4 

5 

1 

Hawaii. 

4 

I 

24 

u 

Australia and New Zealand.... 

1 

| 

224 

30 

I 

a 

30 

3 

50 

75 

3 

Haiti. 

6 

Porto Rico. 

i 

15 

4 

3 

224 

224 

30 

90 

4 

Other West Indies. 

I 

15 

i 

i 

24 

1 

1 4 

3 

3 

S 

60 

1.20 

f 

1.35 

30 

60 

3 

4 

Central America: 

East Coast ports. 


224 

824 

30 

44 

6 

Interior. 

2 

4 

West coast ports. 

1 

3 

5 

Interior. 

24 

a 

90 

3 

4 

3 

1. 8 05 

20 

45 

21 

4 

7 

Panama. 

1 

1 

4 

4 

75 

A 

Colombia: 

Ports. 

l 

30 

If 

20 

4 

7 

Interior. 

4 

6 

9 

5 

Venezuela..*. 

i 

1 

1 

30 

30 

50 

4 

4 

4 

1 

2 

2 

4 

50 

X 

60 

3 

Guianas. 

20 

f 

24 

3 

24 

24 

2 

5 

5 

3 

5 

5 

Brazil, direct. 

1 

If 

30 

1 

8' 

9 

8 

3 

4 

1 

Argentina, direct. 

30 

6 

5 

| 

1 

1 

1 

21 

3f 

3f 

Uruguay, direct. 

1 

30 

4 

A 

Paraguay, direct. 

1 

30 

5 

4 

f 

11 

24 

24 

21 

Q 

Ecuador!" 

Ports. 

14 

24 

3 

f 

11 

H 

6 

7 


Interior. 

9 

9 

Bolivia, interior. 

7 

Peru: 

Ports. 

3 

14 

1 | 

4 

If 

21 

If 

21 

7 

Q 

Interior. 

4 

5 

g 

94 

8 

94 

•* 

44 

4 

44 

Chile: 

Ports. 

3 

14 

If 

4 

7 

21 

Interior. 

4 

5 

8 

































































































THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


29 


('lass 1: Approved merchandise other than classes 2, 3, and 4. 

Class 2: Billiard balls, cigars, optical instruments, hardware. 

Class 3: Velvet, antiques, jewelry (cheap), smoking articles, razors and 
blades, sporting goods, toilet articles, knives, tools, dry goods. 

('lass 4: Embroideries, ribbons, laces, watches and parts, perfumery, silk 
goods, woolen cloth, clocks, handkerchiefs, notions, plated ware, silverware, 
canned fish, cotton piece goods in cases, cutleVy, beets, hats and caps, gloves 
and glove leather, haberdashery, hosiery, leather in cases or bales, neckties, 
underwear, clothing, beads, beaded bags, shirts, collars, sweaters, furs, rifles, 
revolvers, candy, confections, guns, glassware, foodstuffs, toys. 

A Brief Summary of the American Law of Common Carriers for the Loss 

or Damage of Merchandise. 

A common carrier is one who holds himself out to the public to transport 
persons or freight for hire. The definition has been otherwise given as one who 
undertakes for hire to transport persons or freight for all who choose to 
employ him. 

The carrier exerc ses a public employment, and sometimes possesses a legal 
or real monopoly. He selects his own methods of transportation, his own time 
for performance, provided it is reasonable, and his own employees. He exer¬ 
cises absolute control over the transit, and usually fixes his own charges. 
Lienee the settled rule of law for ages was to impose upon him liability for all 
loss or damage unless caused by the act of God or the public enemy. Such an 
extent of liability was vital for the maintenance of commerce and for the 
safety of those who dealt with the carrier, and it was based upon the moral 
principle of prudence, removing from him all temptation and imposing upon 
him all liability except for causes manifestly beyond his control. 

Gordon v. Litter (8 S'. & R. (Pa.) 533). —Although the sli pping conditions of 
modern life have led to reasonable modification of this stringency, the common- 
law rule still exists in the main, and with the immense increase in the business 
of carriers and the long distances to which they transport goods, have added to 
rather than diminished the difficulties of a shipper who seeks to recover a loss 
or injury to his goods. These very factors have at the same time increased the 
opportunities and temptations of the carrier and his employees to neglect or 
violate his trust. The carrier’s control of the goods intrusted to him, the means 
of transit, the time of shipment and delivery, the appointment of employees, and 
all other conditions of the carriage are just as absolute as when the wise old 
rule was laid down. But the great hardship imposed on the carrier in certain 
special cases where goods of great value were either delivered to him without 
notice of their character or which required great tenderness in handling, with¬ 
out notice of the extra care required, and losses happening by sheer accident, 
without any possibility of fraud or collusion, such as a collision at sea by 
night or in a fog or an accidental fire spread’ng to his property from some other 
source, all gradually led to a reasonable relaxation of the old rule where the 
carrier and shipper expressly thereunto agreed. 

A r i. Y. Gen. R. R. v. Lockwood (17 Wallace , 357). —The limitation agreed upon 
must be one the law recognizes as reasonable and consistent with sound public 
policy. 

Southern Express Co. v. Caldwell {21 Wallace , 26V/).— Congress saw fit to 
pass certain statutes exempting carriers by water from their full common-law 
liability under certain circumstances. Thus, in the case of seagoing vessels, 
the act of 1851, sections 4281, 4282, and 4283, subsequently amended by the act 
of February 13, 1893, relieved the shipowners from all responsibility for loss 
by fire, unless caused by their own design and neglect; for loss of money and 
other valuables, unless the carrier was notified of the r character; and limiting 
the sum total of the shipowner’s liability to the value of the ship and freight 
pending, where the loss happened by the act of the master, crew, or passengers, 
or by collision, or any cause without the privity or knowledge of the owners. 
These statutes, however, do not apply to express companies or common carriers 
who avail themselves of steamboats and other vessels for the transportation of 
express matter in the fulfillment of contracts under which such express com¬ 
panies assume common-law liability. 

•Hill Manufacturing Co. v. Boston R. Corp. (104 Mass. 122).— -The amendment 
of 1893, commonly known as the Harter Act, expressly prohibits, as to any 
vessel transport ng merchandise between ports of the United States and foreign 
countries, any stipulation relieving the carrier from liability for loss or damage 


30 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

arising from negligence in the loading or stowage and other handling of the 
cargo, and this act invalidates any provision in an ocean bill of lading that the 
law of the flag of the vessel carrying the goods shall govern, because the act 
applies to foreign vessels bound on. a voyage from a foreign port to this 
country. 

Knolt v. Botany Mills (179 V. S., 69) — The Harter Act was passed on account 
of the growing tendency of the English courts to uphold any limitation upon the 
carrier’s common-law liability as reasonable, and because English shipowners 
were issuing bills of lading imposing all sorts of conditions and exemptions, 
which left the shipper wholly unprotected and at the carrier’s mercy. 

The Delaioare (161 U. S., 459). —The Harter Act and the statutory limita¬ 
tions of a vessel owner’s liability were not impliedly repealed by. the interstate 
commerce act. 

Alaska S. S. Co. v. U. S. (259 Fed., 743).— Furthermore, Congress, by the act 
of .Tune 29, 1906, known as the Carmack amendment to the interstate commerce 
act of February 4, 1887, fixed the liability of a common carrier for interstate 
shipments as that of the common law, but in the case of Adams Express Com¬ 
pany v. Cronniger (226 U. S.. 491) the Supreme Court of the United States 
declared that the carrier could by special contract limit his common-law liability 
with respect to certain causes of loss and the amount payable in the event of a 
recovery, but could not limit his liability for negligence. 

The right to limit the amount recoverable was held valid even in cases where 
the loss occurred through the carrier’s negligence, but upon the ground that 
such a limitation was not a limitation of liability but a limitation of recover¬ 
ability, and if such limitation was in consideration of a reduced rate of freight, 
it was reasonable and binding upon the shipper and carrier where fairly entered 
into. 

Hart v. Pa. R. R. ( 112 U. S., 331). —Before the Carmack amendment, such a 
limitation with respect to the amount recoverable from the carriers was held in 
some of the State courts as void if the loss occurred through the carrier’s 
neglect. 

Pa. R. R. v. Hughes (202 Pa.. 222 (1902)). — But til's case was appealed to the 
Supreme Court of the United States upon the ground that the interstate com¬ 
merce act of 1887 was legislation upon the subject of interstate commerce and 
Congress had therefore assumed exclusive jurisdiction of the matter; and as 
under the Federal decisions such a limitation has been upheld, those decisions 
ought to govern in a suit in a State court where a different rule has prevailed. 
The Supreme Court, however, held that Congress by the interstate commerce, 
act had not assumed such exclusive control and refused to reverse the Pennsyl¬ 
vania decision. However, by the Carmack amendment. Congress has since taken 
entire possession of the subject of interstate commerce, and now all interstate 
shipments are governed by the acts of Congress and the Federal decisions, and 
not by the acts or decisions of the several States. 

The rule of law laid down in the Cronniger case has been followed in numer¬ 
ous later decisions. One of the latest is that of Marianni Brothers v. Wilson 
Sons Company (177 N. Y. S., 333 (1919), in which is was held that a limitation 
of the amount recoverable was binding upon the shipper even in the case of a 
loss by negligence under the Harter Act. 

The present state of the law upon the carrier’s liability is as follows: “ Upon 
interstate shipments: Upon an interstate shipment made in the United States, 
a common carrier, in the absence of a special contract, is liable for all loss or 
damage which may happen to goods or merchandise entrusted to his care, unless 
such loss or damage be caused by the act of God or the public enemy or by the 
inherent nature of the goods or merchandise or by some act or default of the 
shipper himself.” 

Hannibal & St. J. R. Co. v. Swift (12 Wallace, 262) ; Cronninger v. Adams 
Express Co. (226 TJ. S., 491 ( 1912) ) .—As the Supreme Court of the United States 
puts it, the liability of a common carrier for the safe transportation and delivery 
of goods has long been settled by the common law for every hurt or injury to 
them, unless caused by the act of God or the public enemy. 

The Commander in Chief (1 Wallace, 43). —This has been the law for many 
generations. It had its origin when the Government of England afforded im¬ 
perfect protection /to goods in transit and when robberies were a frequent 
occurrence. It was deemed necessary to make common carriers responsible 
for the safety of the goods entrusted to them, because if this were not done it 
would be in the power of the carrier to combine with robbers or to pretend a 
robbery or some other accident which the shipper was unable to investigate. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


31 


Bingham v. Roger (6 W. & S. (Pa.), 495). —The rule is reasonable because 
when the shipper entrusts bis goods to a carrier he parts entirely with posses¬ 
sion of and control over them and knows nothing of what takes place during 
their carriage, while the carrier, upon the other hand, knows, or has the means 
of knowing, everything which befalls them, and if they be lost or damaged, 
how such damage or loss occurred. Ordinarily a shipper would not be able to 
prove what happened to them except by calling the carrier or his employees to 
testify. Hence the law by commercial necessity and by public policy put upon 
the carrier the sole responsibility, with the exceptions stated. The rule was 
reasonable, furthermore, because the carrier could charge a rate of freight 
commensurate with the risk he assumed. The immense increase in the trans¬ 
portation of goods and merchandise, the immense value they often possess, 
and the immense distances which they are often transported, multiplied the 
difficulties of the shipper who sought to recover for a loss he sustained and 
added to the opportunities and temptations of a carrier who might carelessly 
or willfully violate his trust. While the dangers from robberies from without 
were lessened by the greater strength of the Government, the dangers of em¬ 
bezzlement, of larceny, and of collusion with thieves by those from within were 
greatly increased, and the carrier was naturally held responsible for the man¬ 
agement of his own employees and the conduct of his own business, and re¬ 
quired to adopt such measures as might be necessary to secure the delivery 
of the goods in safety. 

The stringency of the common-law rule, while undoubtedly salutary, was 
an absolute one imposed by law without the act of the parties, but the courts 
began to hold that its force might be lessened if the carrier and the shipper 
so agreed. They held that the parties had the right to make a contract be¬ 
tween themselves and modify the stringency of the common-law rule, provided 
the contract was just and reasonable and not against public policy. The law 
is thus stated: If the shipper and carrier agree, for some definite consideration, 
to limit the carrier’s liability, this agreement is valid if the limitation is fair 
and just and not against public policy. 

R. R. Co. r Lockwood (17 Wallace, 357); Santa Fe Rif. v. Grant Bros. 

(228 U. S., 177); Pierce v, Wells Fargo (236 U. S., 278).— It has been held 
that the carrier may contract with the shipper for exemption from any liability 
for loss or damage to goods and merchandise occurring from certain agreed 
upon causes—fire, for example—where these causes were without the negli¬ 
gence of the carrier or his servants. To support such a contract the agreement 
must be definite. The consideration is usually a reduced rate of freight. 

York r. Central R. R. Co. (3 Wallace. 107); Arthur v. Texas & Pacific (204 
TJ. S., 4^7 ).— It has also been held that the carrier and shipper may agree upon 
a definite time within which suit may be brought for loss or damage to the 
goods. For example, a time limit of 90 days after delivery has been held 
reasonable. 

Mo., Kans. & Texas R. R. Co. v. Harriman (227 U. S., 657). —Since the Cum¬ 
mins amendment of March 4, 1915, hereinafter referred to, the period for 
instituting suit shall not be less than two years. 

It has also been held that the carrier may agree with his shipper that notice 
of any loss or damage to the goods must be given within a certain agreed-upon 
time. 

So. Pacific Ry. v. Steivart ( 248 U. S., 446 (1919)). —And the courts have 
gone so far as to hold that even if the amount of the loss could not be ascer¬ 
tained within the time agreed upon, that did not avoid the stipulation. 

Until the passage of the Cummins amendment of March 4, 1915, the general 
rule declared by the United States courts was that a common carrier might 
by a just and reasonable agreement limit the amount recoverable by a shipper 
in case of loss or damage to an agreed upon value made for the purpose of 
obtaining the lower of two or more rates of freight, and which lower rate of 
freight was proportionate to the amount of the risk. 

Cronniger v. Adams Express Co. (226 U. S., 490) ; Mo., Kansas & Tex. Ry. 
v Harriman (227 U. S., 657) ; Cincinnati & Texas P. R. v. Rankin (241 U. S., 
319) ; N. Y. Cent. Ry. v. Beahan (242 U. S., 148); Amer. Express Co. v. Horse¬ 
shoe Co. (244 U. S., 58) (pp. 62, ft?).—The Cummins amendment provides that 
where the goods were hidden from view by wrapping, boxing, etc., the carrier 
not being able to discover the character of the goods, and the carrier’s liability 
would not then extend beyond the amount so specifically stated. 

The Cummins Act of 1915 made a number of radical changes in the law of 
liability applicable to interstate transportation. Under the laws that existed 


s 


32 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

before the Cummins amendment, a common carrier in an interstate shipment 
could not limit its liability for its own negligence, but it could by agreement 
with the shipper fairly entered into limit the amount of its liabilty, whether 
caused by negligence or not. In other words, a shipper could undervalue his 
shipment in order to obtain a lower rate, provided it was agreed that trans¬ 
portation companies’ liability in the event of loss would be limited to the value 
given. Such an arrangement was approved by the Federal courts. 

The Cummins amendment in terms prevented the making of such an agree¬ 
ment and provided that such a contract was unlawful, and that notwithstand¬ 
ing any limitation, the shipper might recover the full value of the article 
where the loss was “caused by it” (the carrier). The quoted clause is the 
same as appears in the Carmac amendment, and has been construed to fix the 
liability of the carrier as it was at common law, which was a liability whether 
caused by the carrier’s neglect or not, and not occasioned by the act of God 
or the public enemy or the inherent nature of the goods, but provided, how¬ 
ever, that a carrier might limit its liability for a loss not due to his neglect 
by a fair and reasonable agreement based upon a proper consideration, usually 
a reduced rate. 

The Cummins amendment act of 1916, amending the act of 1915, again 
changed the law and made certain changes and provided certain exemptions as 
follows: 

First. Baggage carried on passenger trains and boats carrying passengers 
are not within the Cummins Act. 

Second. Property other than baggage, concerning which the carrier has 
or shall be authorized- or required to establish rates dependent upon values 
declared by the shipper, or agreed upon in writing as a reasonable value of 
the property, is not within the Cummins Act. 

Third. Ordinary live stock received for transportation is within the Cummins 
Act. 

Fourth. Property received for transportation concerning which the carrier 
has not been or shall not thereafter be authorized or required to establish 
rates dependent upon values declared by tne shipper or agreed upon in writing 
as the value of the property, is within the Cummins Act. 

Fifth. Live stock, such as is chiefly valued for breeding, racing, show pur¬ 
poses or other special uses, is not within the Cummins Act. 

Accordingly as to classes 1. 2 and 5, the law is exactly as it was prior to the 
Cummins amendment, and this prohibits the carrier from exemption itself 
from liability for its negligence, by any agreement, but permits the carrier to 
limit the amount of its liability by an agreement with the shipper fairly 
entered into and based upon a reduced rate. As to classes 3 and 4, no agree¬ 
ment can be made between the carrier and the shipper which will limit the 
liability of the former or release it from the payment of the full value of the 
property, in case of its loss or destruction. 

There have been no adjudged cases, which we regard as authoritative, since 
the amendment to the Cummins amendment, August 9, 1916, and what the 
decision of the Supreme Court of the United States would be upon an agree¬ 
ment between the shipper and carrier limiting the carrier’s liability for a 
definite amount, is not possible to say. The probabilities are that if the agree¬ 
ment was supported by a definite consideration, such as a reduced rate of 
freight, it would be upheld. 

Upon intrastate shipments .—When a shipment is within the borders of a 
particular State—that is, intrastate—the law governing the carrier’s liability 
is that of the State within which the shipment is made and the carriage termi¬ 
nated. Generally speaking, in the absence of a special contract the common- 
law rule is in force, and the carrier’s liability is that of an insurer, with the 
only exception of an act of God and the public enemy. 

With respect to the carrier’s right to limit his liability at common law when 
the shipment is intrastate, by making a special agreement with the shipper and 
the extent to which such limitation may extend, the statute laws of the several 
States and the decisions thereunder differ. Most of the States recognize the 
right of the carrier to limit his liability by a special agreement to certain 
causes, distinctly enumerated, none of which originate in the negligence of the 
carrier or his servants, but with a few possible exceptions the State laws gen¬ 
erally deny the carrier the right to limit his liability for his own negligence or 
that of his servants. Some of the . States allow a limitation of the amount 
recoverable, provided the rate of freight is a reduced one, and this whether the 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 33 

loss occurs through negligence or not, while other States recognize such right 
upon the part of the carrier, provided the loss is without his negligence. 

Upon an interstate shipment when the carrier fails to deliver— When a car¬ 
lo 1 upon an interstate shipment tails to deliver the goods and fails to explain 
'V 1 -' ) le ( l° e ( s not deliver them that is, if he simply has no answer to make to 
toe sliippei s claim -and is unable to show what befell the goods, he may, by a 
special agreement with the shipper, have his liability limited to certain specific 
causes of loss, not occasioned by negligence, and to a certain specific amount, 
provided such amount has been agreed upon in consideration of a reduced 
freight rate, the carrier must have in reality two or more rates, and the 
shipper must have accepted the reduced one when agreeing to limit the car¬ 
rier s responsibility. Generally speaking, a special contract providing for such 
limitation is binding under such circumstances, and should the goods not be 
delivered at all the carrier’s liability is limited to the amount agreed upon in 
the bill of lading. This is the way the law stands to-day where the carrier is 
unable to show what became of the goods intrusted to his care. 

Under the decisions of the United States courts it has been held that a lim¬ 
itation of the amount recoverable by a special agreement with the shipper is not 
really a limitation of the liability of the carrier, but simply a method of fixing 
an agreed upon value of the goods for the purpose of adjusting the freight rate 
and determining the amount which the carrier is to pay in the event of loss. 
Hence, therefore, no matter how the goods have been lost, whether by negli¬ 
gence or not, the amount recoverable may under these decisions be limited to 
the agreed upon value, but it is perfectly evident that such construction of the 
law puts a premium upon the carrier for silence. He can keep his mouth shut 
and depend upon the ground that be knew nothing about how the loss occurred. 

Of course, if a carrier willfully holds on to the goods and refuses to deliver 
them, or if he actually delivers them to the wrong consignee, he is guilty of a 
conversion and can be sued in trover and made liable for the full value of the 
goods; but the mere failure to deliver, or the failure to deliver on demand, 
while evidence of conversion, is not conversion in itself. 

Elsie May in v. Dins more {70 N. Y. J/10); Leo Utassy v. Barrett (219 N. Y. 
420). —The reported cases upon the question of a carrier’s liability for conver¬ 
sion are few in number, but they seem to hold that the burden of proving a 
wrongful conversion by the carrier is upon the shipper, but this is a burden 
almost impossible to meet, except in a clear case. 

The general rule of law is that when a case is brought against a carrier for 
the loss or damage of goods, the burden of proof is upon the carrier to show 
that the loss occurred from an excepted cause (where the bill of lading so pro¬ 
vides) and the carrier having proved an excepted cause, then the shipper, in 
order to recover, must prove that the cause was the result of negligence. 

Clark v. Barnwell (12 Howard , 272) ; Transportation Co. v. Downer (11 Wal¬ 
lace, 129) ; Galveston R. R. v. Wallace (223 U. S. 481). —However, as a limita¬ 
tion of the amount recoverable, lias been held not a limitation of liability of the 
carrier but merely a method of computing the loss, the shipper would be bound 
to show a wrongful conversion if he claimed one. 

Upon ocean bills of lading; goods imported. —With respect to all contracts, the 
general rule of law is, that their nature, obligation, and interpretation are gov¬ 
erned by the law of the place where they are made. Sometimes the parties ex¬ 
pressly contract at the time of making that the contract is to be construed by 
the law of some other place, or that it is to be performed in some other place 
and construed accordingly. 

A contract of affreightment made in one country between citizens or resi¬ 
dents thereof, and the performance of which begins there, is governed by the 
laws of that country, unless when entering into the contract the parties clearly 
manifest a mutual intention that it shall be governed by some other law. 

Liverpool d G. W. Steam Co. v. Phoenix I?is. Co. (129 U. S., 397) .—To this 
general rule there is an exception, that if the foreign contract of affreightment 
is against the public policy of the country in which suit is brought, that country 
will declare it invalid. For example, a foreign bill of lading covering a ship¬ 
ment of goods from a foreign country to the United States, if valid where made, 
will be held valid in this country, provided that its terms do not offend against 
the public policy of the United States or against the Harter Act, which applies 
to a shipment from a foreign port to a port in the United States. 

Knott v. Bottomley Mills (179 U. S. 69) .—Limitations of liability for negli¬ 
gence are contrary to the public policy of this country, and except in certain 

60683—21-3 



34 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


cases, against the prohibition of the Harter Act. Hence they will not he en¬ 
forced in our courts even if contained in an ocean bill of lading which is valid 
bv the law of the country where it was made. 

'Liverpool r. Phoenix Ins. Co. (129 U. S. 397); The Kensington (183 U. S. 
263 ).—As the courts have construed an agreement for the valuation of the 
property carried, based upon a reduced rate of freight, as not a limitation of 
liability for damage occasioned by negligence, hut merely a method of de¬ 
termining the amount of the recovery a foreign contract of affreightment 
fairly made with the shipper, valuing the goods at a definite amount, is valid 
in our courts, provided that the carrier can not exempt himself from the con¬ 
sequences of his own or of his servant’s neglect. 

Hart v. Pa. R. R. (112 U. S. 331) ; Caldron v. Atlas 8. 8. Co. (170 V. 8. 272) ; 
Adams Express Co. r. Cronniger (226 U. 8. 491). —Furthermore, it has been 
held that such a limitation as to the amount of the recovery is valid, even in 
cases arising under the Harter Act. 

Frederick Leland Co. r. Hornbloicer (256 Fed. 289); Marianni Bros. r. 
Wilson (117 N. Y. 8. 335). —In our opinion, an agreement which provides that 
in the event of the loss or damage of the goods, the carrier shall be responsible 
for a sum vastly less than their value is in reality and effect a limitation upon the 
carrier’s liability. It is true that such an agreement affords a plan for fixing 
the amount of the recovery, but when it fixes that amount as nominal, or even at 
a substantial reduction from the real value of the goods, it is putting a limit 
upon the liability itself. The case is analagous to that of an underwriter who 
admits liability for the loss he assumed, but claims so large a deductible aver¬ 
age that the assured loses the real benefit of his policy. 

"Upon an ocean Mil of lading; goods exported— When goods are exported 
from this country under an ocean bill of lading to a foreign country, the ship¬ 
ment is subject to the laws of this country, including the Harter Act, and the 
act of 1851, sections 4281, 4282, and 4288, Revised Statutes of the United States. 

Generally speaking, carriers by water differ in no essential respect from car¬ 
riers by land, and in the absence of mutual agreement, carriers by water are 
liable in the same way as carriers by land. 

Liverpool 8. 8. Co. v. Phoenix Ins. Co. (129 U. 8. 397). —Ocean carriers can, 
however, limit their liability like carriers by land, against certain accidental 
causes, and also with respect to the amount for which they are liable in the event 
of the loss or damage of the goods shipped, and the act of 1851 grants to ship¬ 
owners certain exemptions for the purpose of encouraging American shipping, 
and its amendment, the Harter Act, grants further exemptions, the latter par¬ 
ticularly releasing the shipowner from liability for certain errors of navigation 
when lie has otherwise complied with the requirements of the law. The ship¬ 
owner can also contract for relief from his otherwise underlying duty of furnish¬ 
ing an absolutely seaworthy ship, provided he uses due diligence to make her 
seaworthy, and to properly man and equip her, but with these exceptions the 
shipowner can not limit his liability for the negligence of himself or his servants. 

THE LAST DECISIONS. 

The last important decisions which pronounce legal clauses limiting a common 
carrier’s liability to an agreed upon value of the goods carried in consideration 
of a reduced rate of freight and a definite time within which claims, must be 
presented against him are as follows: 

Western Transit v. Leslie & Co. (242 U. S., 430 (1917)) ; Boston M. v. Piper 
(246 U. 8., 439 (1918 )).—With respect to limitations of value by land carriers. 

Frederick Leland & Co. v. Hornblower [256 Fed. 289) ; Marianna Bros. e. 
Wilson (117 N. Y. 8., 335 ).—With respect to ocean bills of lading. 

So. Pacific r. Stewart (24-8 U. 8., 447 (1919); B. & O. r. Leach (249 TJ. S.) 
217 (1919) ). —With respect to the limitations of a definite time within which 
claim must be presented, the last decisions are as follows: 

While the several States of this country, with few exceptions, recognize the 
common-law rule of the carrier’s liability, and prohibit him from contracting 
against his own negligence or that of his servants, some of the decisions recog¬ 
nized in the several States are as follows: 

Maynard r. Syracuse, B. & N. Y. R. Co. (71 X. Y. 180) ; Wescott r. Fargo 
Steam Nar. Co. (61 X. Y. 155); Boyle r. Burk Terminal R. R. Co. (210 X. Y. 
389-392); Kenney r. X. Y. C. & 11. R. R. Co. (125 X. Y. 422).— In New York a 
common carrier may, by express contract, based on a sufficient consideration. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


35 


absolve himself from every degree of negligence on the part of himself or his 
agents and servants, no matter how gross that negligence may be, provided only 
that it falls short of misfeasance or fraud. But the carrier cannot exonerate 
himself by general words. Such exemption must be expressed in unequivocal 
terms, and he is not at liberty to hide the stipulation away under a form of 
words, however broad. Thus, general words, such as that “ the carrier will not 
be liable for loss or detention or damage ”; or, such as release from liability 
“ from whatever cause arising ”; or, “ for damage occasioned by delays from 
any cause,” will not relieve the carrier from the results of negligence. 

In South Dakota, the code (sections 3880-3887) provides that the obligation 
of the carrier can be limited by special contract (section 38S6), but cannot 
exonerate itself from gross negligence, fraud, or the wilful wrong of himself 
or servants (section 3S87). The case of Meuer v. Chi. M. & St. P. Ry., 5 S. 
D. 568-69 X. W. 643, interpreted these sections as declaring that a common 
carrier could contract against its negligence and that of its servants, but not 
as against gross negligence, fraud, or wilful wrong. 

Cen. of Go. Rif. r. IIa11 (124 Go., 302); So. Exp. Co. r. Hauban ( 13-) Ga., 
445 ).—In Georgia a carrier of live stock may contract against its negligence 
and that of its servants s«o that it will be liable only for gross negligence. This 
rule only applies to contracts for the carriage of live stock. 

Don! an r. Southern Pacific (151 Cal., 763 ).—In California, by statute, a 
common carrier can contract against ordinary negligence, but not against gross 
negligence. 

Cliccldey v. III. Central (257 111.); Abram r. Milwaukee, etc. R. Co. (37 
T Vis., 435 ).—In several of the other States, for instance, Illinois and Wis¬ 
consin, there are cases reported as holding that there is a distinction between 
-ordinary and gross negligence, and as to the former a carrier may by special 
contract exempt himself, but not as to the latter. 

Later cases, however, apply the general rule that a carrier cannot contract 
against its negligence or that of its servants. 

There is a decision in West Virginia (B. & O. Ry. v.. Rathbone, 1 W. Va., 
87) which holds that a carrier can contract against its negligence. However, 
later cases decide the contrary and follow the common-law rule. (Maslin v. 
B. & O. Ry., 14 W. Va., 180; Brown v. Adams Express, 15 W. Va., 812.) 


Proposed Amendment to Section 1 of the Harter Act of February 13, 1893, 
Thirty-Seventh Statutes at Large, Page 445, Chapter 105. 

[Proposed amendments in italic.] 

Be it enacted bit the Senate and House of Representatives of the United States 
of America in Congress assembled, That an act entitled “An act relating to 
navigation of vessels, bills of lading, and to certain obligations, duties, and 
rights in connection with the carriage of property,” approved the 13tli day of 
February, 1893, which reads as follows, to wit: 

“ That it shall not be lawful for the manager, agent, master, or owner of any 
vessel transporting merchandise or property from or between ports of the United 
States and foreign ports to insert in any bill of lading or shipping document any 
clause, covenant, or agreement, whereby it, he, or they shall be relieved from 
liability for loss or damage arising from negligence, fault, or failure in proper 
loading, stowage, custody, care, of proper delivery of any kind and all lawful 
merchandise or property committed to its- or their charge. Any and all words or 
clauses of such import inserted in bills of lading or shipping receipts shall be 
null and void and of no effect.” 

be, and the same is hereby, amended to read as follows: 

“That it shall not be lawful for the manager, agent, master, or owner of any 
vessel transporting merchandise or property from or between ports of the 
United States and foreign ports, to insert in any bill of lading or shipping docu¬ 
ment any clause, covenant, or agreement whereby it, he, or they shall be relieved 
from liability for loss or damage arising from negligence, fault, or failure in 
proper loading, stowage, custody, care, or proper delivery of any and all lawful 
merchandise or property committed to its or their charge, nor for any sum less 
than the full actual amount of such loss or damage, and whether the merchandise 
and property has been shipped at a reduced rate of freight or not, or at an 



33 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


agreecl-upon value which is less than its actual value. Any and all words which 
or clauses of such import inserted in bills of lading, or shipping receipts, shall 
be null and void, and of no effect. In the event of loss or damage the burden of 
proving freedom, from negligence shall be upon the vessel and her owner” 
Notice of all claims for loss or damage visible from a superficial examination 
of the merchandise or of the barrel, box, bale, package, or other container hold¬ 
ing the same, shall be given the carrier before removal from the dock, and notice 
of all claims for loss or damage discoverable only by opening the barrel, box, 
package, bale, or other container shall be given the carrier within a reasonable 
time after the delivery of the merchandise to the receiver thereof, such reason¬ 
able time being determined by the nature of the merchandise transported and 
the circumstance of each case. 


Proposed Amendment to the Cummins Act of August 6 , 1916. 

[Proposed amendments in italic.] 

AN ACT To amend an act entitled “ An act to amend an act entitled ‘ An act to amend 
an act entitled “An act to regulate commerce,” approved February 4, 1887, and all 
acts amendatory thereof and to enlarge the powers of the Interstate Commerce Com¬ 
mission, approved August 9, 1910.’ ” 

Be it enacted by the Senate and House of Representatives of the United States 
of America in Congress assembled, That so much of an act to amend an act 
entitled “To amend an act entitled ‘An act to regulate commerce,’ approved 
February 4, 1887, and all acts amendatory thereof, and to enlarge the powers 
of the Interstate Commerce Commission, approved the 9th day of August, 1916,” 
which reads as follows, to wit: 

“ Provided , however. That the provisions hereof respecting liability for full 
actual loss, damage, or injury, notwithstanding any limitation of liability or 
recovery or representation or agreement or release as to value, and declaring 
any such limitation to be unlawful and void, shall not apply, first, to baggage 
carried on passenger trains or boats, or trains or boats carrying passengers; 
second, to property, except ordinary live stock, received for transportation 
concerning which the carrier shall have been or shall hereafter be expressly 
authorized or required by order of the Interstate Commerce Commission to 
establish and maintain rates dependent upon the value declared in writing 
by the shipper or agreed upon in writing as the released value of the property, 
in which case such declaration or agreement shall have no other effect than 
to limit liability and recovery to an amount not exceeding the value so declared 
or released, and shall not, so far as relates to values, be held to be a violation 
of section 10 of this act to regulate commerce, as amended; and any tariff 
schedule which may be filed with the commission pursuant to such order shall 
contain specific reference thereto and may establish rates varying with the 
value so declared or agreed upon ; and the commission is hereby empowered 
to make such order in cases where rates dependent upon and varying with 
declared or agreed values would, in its opinion, be just and reasonable under 
the circumstances and conditions surrounding the transportation. The term 
‘ordinary live stock’ shall include all cattle, swine, sheep, goats, horses, and 
mules, except such as are chiefly valuable for breeding, racing, show purposes, 
or other special uses.” 

be and the same is hereby amended as follows, to wit: 

“Provided, however. That the provisions hereof respecting liability for full 
actual loss, damage, or injury, notwithstanding any limitation of liability or 
recovery or representation or agreement or release as to value, and declaring 
any such limitation to be unlawful and void, shall not apply, first, to baggage 
•carried on passenger trains or boats, or trains or boats carrying passengers; 
second, to property, except ordinary live stock, received for tansportation con¬ 
cerning which the carrier shall have been or shall hereafter be expressly author¬ 
ized or required by order of the Interstate Commerce Commission to establish 
and maintain rates dependent upon the value declared in writing by the shipper 
«or agreed upon in writing as the released value of the property, in which case 
such declaration or agreement shall have no other effect than to limit the 
liability and recovery to an amount not exceeding the value so declared or re¬ 
leased. and shall not, so far as relates to values, be held to be a violation of 
section 10 of this feet to regulate commerce, as amended; and any tariff schedule 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


37 


which may be filed with the commission pursuant to such order shall contain 
specific reference thereto and may establish rates varying with the value so 
declared or agreed upon; and the commission is hereby empowered to make 
such order in cases where rates dependent upon and varying with declared or 
agreed values would, in its opinion, be just and reasonable under the circum¬ 
stances and conditions surrounding the transportation: Provided further, That 
where loss, damage, or injury occurs to property delivered to any common carrier, 
railroad or transportation company, the harden of proving freedom from negli¬ 
gence shall be upon such common carrier, railroad or transportation company, 
and where such loss, damage, or injury results from the negligence of the eom- 
mon carrier, railroad or transportation company, it shall be liable for the full 
actual loss, damage, or injury, and shall not have the right to limit the amount 
of recovery against it to any declared or released value of such property. The 
term, “ ordinary live stock ” shall include all cattle, swine, sheep, goats, horses, 
and mules, except such as are chiefly valuable for breeding, racing, show pur¬ 
poses, or other special uses.” 

STATEMENT OF MR. WILLIAM D. WINTER, NEW YORK, N. Y., 

THIRD VICE PRESIDENT OF THE ATLANTIC MUTUAL INSUR¬ 
ANCE CO. 

Mr. \\ inter. The company I represent being a mutual insurance 
company, and the only one in the United States, we have pursued a 
somewhat different policy from the stock companies. Up to two 
years ago we absolutely refused to admit liability for theft and 
pilferage. 

Mr. Edmonds. on mean the only mutual company in the United 
States doing marine insurance? 

Mr. W inter. Yes; pardon me. 

Mr. Edmonds. I just wanted to correct that. 

Mr. W inter. \ es; thank you, Mr. Edmonds—the only marine in¬ 
surance company on the mutual plan. We took the position up to 
that time, that the marine insurance policy did not cover theft and 
pilferage losses and we refused absolutely to admit any liability. 
This was not done from any lack of desire to protect the merchants 
of the United States, but simply from the viewpoint that to admit 
liability for that risk, introducing that risk into the marine policy, 
would shake the whole basis on which transportation was then done. 
We felt, and our feelings have been justified by the result, that when 
a marine insurance company attempted to assume liability for those 
losses, which we felt should be a burden solely of the carrier, it would 
break down all the care that the carriers were then using for the 
protection of the shipments in their custody. We found that many 
of our assured suffered losses by theft and pilferage. It was not very 
great at that time, but they did suffer it, and they were coming to us 
and asking us to pay them. We refused and told them it was the 
carrier’s liability and we sent them back to the carriers. It used to 
be that the carriers would respond, but, when they could not get 
recovery from the carriers, we were inclined at times to make good 
the loss—not admitting any liability, but just as a matter of fair 
dealing with our merchants, the company working on a mutual plan. 

It came to pass that the steamship companies introduced these 
limited value bills of lading, under which they contracted out of their 
liability, assuming only a small measure of liability for goods in 
their custody. The result Avas that our customers came to us and 
said they could not get along without specific insurance against the 


38 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


risk of theft and pilferage. We were forced into it. to be frank. 
We still insisted it was the wrong thing to do from the merchant’s 
standpoint and that, in the last analysis, he would be worse off by 
insuring that risk than he would be in carrying it or insisting on 
the carrier carrying it. 

The results have justified our feeling in that respect. I have some 
statistics here which I will simply speak of in a general way, be¬ 
cause our company, conducting its operations on a mutual basis, it 
is not possible to compare the premium figures unmodified with the 
loss figures, because of the fact that dividends are declared and paid 
back to the assured. But we found in the beginning of 1918 that the 
losses presented to us were becoming so great in number and so 
large in the aggregate, that the only thing that we could do was to 
start charging a premium for the coverage of this hazard. We 
figured out rates that we thought would be adequate, and the results 
of the first year of doing that we found were very disastrous—the 
losses were far greater than the premiums we received. At the be¬ 
ginning of last year, we materially increased the rates, thinking that 
we could keep abreast of the losses; but we found at the end of this 
year, when the statistics were drawn up, that again we had made a 
serious loss, and we have found it necessary at the beginning of this 
year to advance our rates to a point where we feel the condition is 
so serious that the risk is almost becoming a noninsurable hazard. 

When it becomes necessary to charge rates of 5, 6, 7, 8, and even 
10 per cent to cover a hazard, there is something basicly wrong. 
No such hazard should exist and there must be a remedy for it; 
and I am down here to advocate, as Mr. Rush is, a remedy of fixing 
the responsibility more definitely on the carriers and to get back 
to their old responsibility, which they have been permitted by stat¬ 
utes and decisions to contract themselves out of. Now. we do this 
not with any feeling that the carrier should be unduly charged 
with responsibility, but we do feel that the carrier is the only one 
who has the control of the goods and is the one to insure the goods 
when they are out of the control of the shippers. Furthermore, 
unless the carrier exercises due diligence there is no chance of their 
goods arriving at destination. 

Now, just to give you some side thoughts on the matter, we feel 
that it is greatly to the advantage of the American shipper, greatly 
to the advantage of the American shipowner, and greatly to the 
advantage of the country commercially as a whole for American 
exporters to be able to deliver their goods in sound condition at des¬ 
tination. No merchant takes insurance because he wishes to avail 
of the benefits of that insurance in dollars; he takes that simply 
as an indemnity against possible loss. What he wants to do is to 
deliver his goods sound in the foreign country. If the American 
shipper can do that, he will get a lead over his foreign competitors; 
and the whole attitude of our company and the attitude we are advo¬ 
cating is to do what we can to prevent goods arriving at foreign 
ports pilfered, broken, leaked, or otherwise made unfit for the market 
for which they are intended. We feel that insurance against this 
risk only tends to increase the hazard, because it is inevitable, it 
is only human nature, that when a merchant has insurance against 
a risk he will become less keen about pursuing his remedy, such as 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 39 

it is, against the carrier, and the shipowner, knowing there is in¬ 
surance on the commodity, will strive in every way possible to gain 
the advantage of that insurance and to forego, if he can, his respon¬ 
sibility for the shipments in his custody. 

Now, just along this line, in addition to theft and pilferage, at the 
present time there is great urgency to cover fresh-water damage, 
damage due to contact with other cargo, damage due to poor stowage. 
Now, all of these things, if they be insured against and the under¬ 
writers are responsible because of these hazards, we do not want 
to do it and are not going to do it unless conditions become such 
as to force us into it, because we feel it is simply again breaking 
down the responsibility of those who should be charged with those 
losses. If we cover fresh-water damage, the carriers are going to be 
less diligent in seeing that the goods are protected on open wharves 
or while they are being loaded into the vessels. If we cover damage 
due to poor stowage, the carriers will be less careful about stowage, 
and it is a fact that stowage has become very bad, owing to the tre¬ 
mendous increase in the growth of our merchant marine and with 
our impossibility of quickly training up a body of experienced and 
efficient stevedores. All of those things have been in a measure the 
outgrowth of the war and the tremendous increase that we have 
had in our merchant marine. And unless that responsibility con¬ 
tinues to rest where it should rest—I am speaking now of the things 
other than theft and pilferage—we will find in a few years from now 
that the theft and pilferage situation will be repeated in connec¬ 
tion with bad stowage, fresh-water damage, breakage and leakage, 
and so we urge thajt the responsibility be placed where it can be 
controlled—not trying to throw any undue burden on the shipowner, 
but the shipowner is the only one who can control that hazard. The 
underwriter has no direct relation with the shipment, as you well 
know. We are only third parties, acting as indemnifiers of one of the 
primary parties to the transportation contract. Anything we can 
do must be done through the shipper; and it does seem so clear, 
from a national standpoint, from an economic standpoint, from any 
standpoint of fair reasoning you wish to look at the matter, that 
the only sound way of making a definite improvement in this situa¬ 
tion is to let the burden rest where it can be controlled, and that 
the burden can only be controlled by those in whose custody the 
property is being transported, that we urge the responsibility should 
be placed on the carrier. 

Just to show what happened in relation to theft and pilferage, 
with respect to the Atlantic Mutual Insurance .Co.—and I have had 
to revise these figures in order to bring them down to a comparative 
basis, by allowing for the dividend that has been returned to the 
assured—I will state that in 1919 and 1920, the Atlantic Mutual In¬ 
surance Co. took in, net, $469,609 in theft and pilferage premiums; 
and they paid out, against that, in losses that have been presented 
to the company by the 1st of March, 1921, $536,773—or they paid 
out more than they took in by $65,164. No allowance is made here 
for the cost of operating the’company, and it would not be unfair 
to add, as a pro rata share of the overhead applicable to this theft 
and pilferage, say $75,000—which would show, over the 2-year 
period, a loss of $140,000, notwithstanding the fact that during that 


40 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


period we had made drastic revisions of the rates to endeavor to 
keep up with the increase in losses, because month after month we 
found that the number of claims being presented were increasing 
and the aggregate amount of those claims was increasing. 

Now, in those figures we have not included losses by nondelivery, 
because in our method of statistizing we do not consider that as theft 
and pilferage losses. I have no figures to show how much that loss 
is, but the premium that is developed here for theft and pilferage 
was supposed to be sufficient to take care of these nondelivery claims 
that do not appear here, notwithstanding at the present time it shows 
$140,000 net loss. 

And, furthermore, let me point out that while we can determine 
exactly the premiums received, it is impossible to know what the 
losses against those premiums will be for months afterwards; be¬ 
cause claims come in five and six months and sometimes a year after 
the shipment leaves these ports. So much for the results from that 
point of view. 

This statement is considered from the point of view of our assured, 
and it is only fair to state that we find there is a difference in ship¬ 
pers. Some shippers have very bad theft and pilferage records; 
others have good ones. Some of that is due to chance: in other cases 
it is due to poor packing and poor methods of handling. That is 
something that the underwriters, as underwriters, have striven to 
correct, but with only partial success. But were the responsibility 
absolutely on the part of the transportation companies, I do not see 
why it would not be possible for them to do a great work in the im¬ 
provement of the packing, in that they could refuse to receive ship¬ 
ments not properly packed. They could at least have them re¬ 
coopered or reboxed before they were sent forward. 

Now, we can look at the results of our business from another 
standpoint, that of the commodity, and we find from analyzing 
losses from the viewpoint of the commodity—and we have done it 
somewhat on the system of calculation that the railroads use—as to 
the products of agriculture, which in large measure take in bulk 
articles, like grain, cotton, lumber, logs, and those things, with only 
a small percentage of stuff like dried fruits and nuts anrl green fruits 
which will be classed in the products of agriculture, that the results 
there are good; there is not much the'ft and pilferage except in those 
special commodities of which I speak—dried fruit and nuts and 
green fruit. We find there is a tendency to take them, naturally, 
because it is something that appeals to the desires of the men work¬ 
ing on the docks and in the ships. 

The products of animals are good, with the exception of the manu¬ 
factured products, packing-house products, and especially canned 
and bottled goods, which show unfortunate results with us. The 
larger packages, such as salt meats and sugar-cured meats and those 
shipped in barrels and such things, show rather good results. 

The products of the forest, such things as lumber and products of 
that kind, show uniformly good results. 

Products of the mines also show uniformly good results. 

But when we come to the products of the manufacturers, there 
is the rub, because it is there that the great losses are suffered, a.t 
least by our company; and I think it would be found generally with 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


41 


all the companies that on those products of manufacturers the losses 
are heavy, because those are the things that are desired. And in 
those products of manufacturers you will find that the things that 
appeal most to the individual—shoes, stockings, underclothing, hats, 
suits, and such things—produce most of the pilferage losses. 

Now, the losses can be looked at from a third viewpoint, that of 
the routes of shipment. It is and has been a rather astounding thing 
to us—and 1 cite it because it is so remarkable—that we find that 
the business which we do out of the port of New York, both outward 
and inward, produces an undue share of loss. It is true that out of 
the other ports, Boston, Philadelphia, Baltimore, New Orleans, and 
the west coast ports, to the Latin-American countries, losses are pro¬ 
duced; but it is a fact that on shipments out of New York to all 
ports of the world, or on shipment from all ports of the world to 
New York, there is a constant flow of loss. The reason for this can 
only be left to speculation, but it is our feeling that there is not the 
same specific protection in that port that there is in the other ports 
of the country, due largely to the fact that it is almost impossible, 
as far as we can find out, to obtain conviction of those who are 
caught red-handed in the act of stealing goods. 

I cite those three angles just to show the ramifications of the prob¬ 
lem. You have the problem from the viewpoint of the shipper, the 
problem from the viewpoint of the kind of goods he ships, and the 
problem from the viewpoint of the routes over which the goods are 
shipped; and I can not help but feel .that the control of that is 
largely—not finally but largely—in the hands of the transportation 
companies, in that they can control what they receive and the con¬ 
dition in which it is received, and they can control both at the point 
of origin and the point of delivery, the care and custody of that 
property. 

Now, it is not only theft and pilferage and nondelivery that has 
increased so markedly, but leakage has increased enormously. And 
here, too, I think the carrier could exercise a wholesome influence in 
seeing that the goods he received were properly packed, and stowing 
them properly after he receives them. We have done a leakage busi¬ 
ness for a great many years, because the leakage question is an abso¬ 
lutely different one from the theft and pilferage question. 

Theft and pilferage is a moral problem, absolutely; but in the 
shipment of liquids there is and always has been a normal usual loss 
and in the event of sea peril, stress of weather, or stranding or col¬ 
lision there have been losses due to fortuitous causes which under¬ 
writers are content and willing to bear. But we had had enough 
experience in that business to be pretty sure as to the proper rates 
to charge on varying commodities. But we found, in the year 1920— 
we only kept statistics in that year in detail—that the net premiums 
for leakage only, after allowing dividends, were $73,103 and the 
losses $110,380, "showing a net loss of $33,277. With allowance 
for overhead expenses prorated over this particular part of our busi¬ 
ness, which would be fair to place at about $12,000, it would make 
the net loss for the year on the leakage business, say, $50,000. 

Now, this was due to a variety of causes, but the two outstanding 
causes, as we found them to be, are that invariably the packages of 
goods are received by the transportation companies in bad order and 


42 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

taken in bad order,* if you will, and poor stowage, putting heavy 
cases in places where they are not only not safe from the point of 
view of the package and goods themselves, but also put in places 
where they were an absolute detriment to the other cargo in the 
shipment. Now, that storage is something absolutely in the control 
of the carrier. The poor packing is only to an ^extent in the control 
of the carrier. We believe that part of this particular loss (which I 
do not cite as a moral loss at all or one that concerns a moral hazard) 
will remove itself in time when in foreign countries it is possible 
to get better containers; but, at the same time, we do feel that this 
hazard has been greatly increased due to the inefficient manner in 
which the goods were transported. 

I am absolutely in sympathy with Mr. Rush’s remarks and in 
sympathy with the suggestions which he makes for the amendment 
of the Harter Act and the amendment of the Cummins Act, because 
we believe absolutely that that is the only way of making a real 
impression on the hazard as it now exists; that that is the only real 
way of reducing the cost of this loss, because it is an absolute 
economic loss to this country, and it has an absolutely bad influence 
on the extension of our foreign trade. The underwriters can go on 
increasing rates if they will, but I think they would rather and 
will, if necessary, cease insuring. But the thing to do is to control 
the matter so that the economic loss will stop, so that the cost that 
is now imposed on foreign trade will stop, and this cost can be 
reduced, at least, if it can not be altogether eliminated. We ask 
that this matter be considered by the committee—the amendment 
of these two acts—from the viewpoint of our national standing in 
the world. If we can get to the point where American merchants 
can deliver their goods in foreign ports in better condition than 
can our foreign competitors, why, we will get the markets and we 
will make a greater profit, because we will have that less cost; we 
can get in and quote a less price because we have that less cost, and 
the country, it seems to me, that can first get some solution of this 
terrible problem will find that the result has been well worth the 
effort. And if it does for the moment, while we are readjusting, 
cause undue hardship on one particular part of those who are en¬ 
gaged in overseas commerce, yet from the point of view of all and 
from the national viewpoint it will be well to go through that slight 
period of readjustment. 

Mr. Leiilbach. Mr. Winter, if your company pays a loss due to 
negligence in the act of an agent of a shipowner, for which he is 
liable, do you enjoy the right of subrogation? 

Mr. Winter. We do enjoy the right of subrogation. 

Mr. Lehlbach. Practically, as a matter of practice? 

Mr. Winter. As a matter of practice, we find that most shippers, 
after we have made settlement with them, are rather loath to go 
to the trouble, and it is a great deal of trouble, in pursuing their 
remedy against the carrier, for the remedy must be pursued’through 
them. We have no direct action. 

Mr. Lehlbach. But you do not contract that they shall do that 
to your interest ? 

Mr. Winter. Absolutely; we always insist on it and we keep fol¬ 
lowing them up. The cases are never closed; we keep after them 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


43 


and after them and after them. But I merely state it is human 
nature, when you have been reimbursed, not to want to go to addi¬ 
tional trouble to get your money out of the carrier. 

Mr. Lehlbach. Do the bills of lading actually reverse the normal 
liability in that respect by specifying, if the shipowner is liable to the 
shipper for a loss, that if the shipper collects from the underwriter 
he must apply that to what he expects from the shipowner? 

Mr. Winter. Some bills of lading do, sir; they claim the benefit 
of any insurance that ma}^ be on the commodity. 

Mr. Lehlbach. Is that kind of a contract in accordance with pub¬ 
lic policy? 

Mr. Winter. It is not; it is absolutely against public policy. 

Dr. Huebner. Is it also against public policy for a bill of lading 
to specify that the carrier is not liable for anything that can be in¬ 
sured against? 

Mr. Winter. Absolutely. 

Mr. Edmonds. I was wondering whether you would call the loss 
of whisky leakage or a moral loss. [Laughter.] 

Mr. Winter. Now, that you have raised that point, a difficulty 
arises in the. shipment of whisky in bottles, as to whether the loss 
is due to breakage or pilferage; because the method used in pilfering 
whisky in cases is to drop the cases and then to hold a container 
under the case and catch the drips. [Laughter.] There was also 
a case that happened on the New York docks, where whisky had 
been sent—it may not have been whisky, but liquor of some form. 
It was sent in casks and lay on the docks, and during the daytime the 
river pirates located the casks on the dock and, after dark, they 
came down with boats, under the dock, bored a hole through the 
dock and into the casks and, with their containers, emptied the 
casks. There are various ways of doing it. 

Mr. Edmonds. That is leakage, isn’t it? 

Mr. Winter. That would be a claim on the underwriter, I think, 
as pilferage; because it would show the case had been approached 
from the outside. That would not be considered as a leakage loss. 

Mr. Lehlbach. Can the river pirates operate, as in the example 
you have given us, successfully operate, without the connivance of 
employees on the docks? 

Mr. Winter. I think not. And I am also of the opinion they can 
not operate very long, except with the connivance of the police 
authorities. 

Mr. Edmonds. Do your New York laws require the dock should 
be kept open at all times for access to the public? 

Mr. Winter. I do not know as to that. 

Mr. Edmonds. Can the owner of the pier close the same and not 
allow anybody on it? v 

Mr. Winter. I can not answer that question. 

Mr. Edmonds. Will you try to find out and let me know ? I find 
there are different laws in different States and I have never gotten 
a complete compendium, and I would like to know. 

Mr. Osborn. I think it would depend on what dock it is. I have 
had occasion to look into that on certain docks, and I have found 
they could protect the docks. 

Mr. Edmonds. I would be very glad, indeed, if Mr. Winter could 
furnish the information as to the New York docks. I find in Phila- 


44 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

delphia we have to keep watchmen on our docks, and if a man can 
show he has business with the ship, or anything like that, he has 
to be allowed on the dock at any time—day or night. 

Mr. Lehlbach. In speaking of losses from theft and pilferage 
and nondelivery, you have pointed out the many losses due to the 
destruction or disappearance of the commodities themselves. Can 
you suggest for the record indirect losses that result, such as losses 
resulting from delay, inability to fill contracts, loss of trade, and 
other elements? 

Mr. Winter. Why, yes; I could. It quite often happens that con¬ 
tracts are canceled because of the fact that on arrival at destination 
parts are missing. For instance, machines that have brass fittings 
that are small and removable often arrive at destination with those 
brass fittings removed, and resulting sometimes in the abrogation of 
the contract. In any event, it serves to delay the carrying out of 
the contract of sale. That condition has become so bad that it is 
customary now to ship those brass parts in separate packages in such 
a way that they will not be noticed and the shipments go forward 
minus those parts, which follow either on the same ship or on a later 
ship. I think in one particular case, where some motor trucks were 
sent to Copenhagen and return from there they came back with 
all the removable parts on those motor trucks, the lamps, horns, and 
everything small and removable and salable, taken off. The result 
is, you can see for yourselves, any goods arriving at destination in 
such condition as that are not salable and result oftentimes in loss 
of the market; because maybe by the time the missing parts can be 
forwarded market conditions have so changed that the commodity is 
valueless in that market. 

Commissioner Lissner. You stated, Mr. Winter, that many losses 
were due to the inexperience of stevedoring companies in handling 
cargo. I am informed by the representatives of the Shipping Board 
that in our work inexperience results from newly organized stevedor¬ 
ing companies. Have you any observation to make in that regard ? 

Mr. Winter. You mean by newly organized stevedoring companies 
those that have been organized to meet the demand of the last few 
years ? 

Commissioner Lissner. Yes. 

Mr. Winter. You mean by newly organized stevedoring companies 
which have had long experience; and the head of one of those com¬ 
panies could almost build a ship himself from beginning to end. 
Those men would know hoAv to stow cargo in a ship so that it would 
be in a sound condition, so that even if the ship met heavy weather the 
cargo would not shift. It is a real science stowing cargo in a ship 
so that the cargo will not move when the ship encounters heavy 
weather, such as is encountered on the North Atlantic in the winter. 

Now, it is apparent that those men can only become experienced 
through a long training. And there has been such a great increase in 
the need of those men that, of course, many inexperienced stevedores 
have loaded vessels, with disastrous results. 

Commissioner Lissner. Has anything practical been done with re¬ 
gard to a training school for stevedores; or is that a practical sugges¬ 
tion? It is expensive, is it not, for them to get their experience in 
actual work? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


45 


Mr. Winter. It is pretty expensive; but that is the only sound way. 
They could get a great deal of theoretical knowledge in that way which 
would be valuable. School training would be valuable to that extent, 
just as school training is valuable to the skippers and crews of our 
ships. But it does not give them the actual shop experience, if I 
might use that word; they need the apprenticeship in doing the actual 
work. 

Commissioner Lissner. Is there anything essentially vicious or 
undesirable in regard to this method of organizing subsidiary steve¬ 
doring companies ? 

Mr. Winter. I do not know what answer to make to that ques¬ 
tion, because I do not quite know what the purpose of the question is. 

Commissioner Lissner. Well, I am simply asking a question that 
was suggested to me; I do not know much about it myself. 

Mr. Winter. I do not. either. 

Mr. Edmonds. I think it simply means this: They have a number 
of operators of allocated ships in the Shipping Board, and these 
operators have organized subsidiary stevedoring companies. 

Mr. Winter. I guess that is it. 

Mr. Edmonds. I suppose he means to ask if it is a vicious prac¬ 
tice to allow these operators to organize these subsidiary stevedoring 
companies. 

Mr. Winter. Well. I think it is a vicious practice in that it tends 
to a breaking down of the care that is taken in loading vessels. For 
instance, if you had an operating company that was not of the high¬ 
est class, the probabilities are that the subsidiary stevedoring com¬ 
pany would be of the same class. And just to give one example—I 
do not like to mention specific cases or names—but take the steamer 
Poslcmd. There is a case that has been so widely discussed in the 
newspapers that you all doubtless know what has happened. Now, 
we have absolute information that the cargo supposed to have been 
stowed in the bottom of the Posland , that could not have been 
touched between the time the steamer left New York and the time 
she returned to New York, was pilfered by the stevedores at the 
time of loading—there was no way of getting at that cargo during 
the voyage out or the voyage home—and that that cargo was broken 
into and some of it taken out from the lower tiers, and the cases 
came up empty or partially empty. Now, that is one illustration of 
what unified control may lead to. 

Mr. Lehlbach. I suppose everybody knows about the Posland 
and the incident that you refer to, but will you state for the record, 
briefly, what it was? 

Mr. Winter. Yes. The steamer Posland was operated by the 
Acme Navigation Co., and owned by the Polish-American Steamship 
Co.; it was one of the Shipping Board vessels that was sold to the 
Polish-American Steamship Co. As you are' doubtless aware, the 
conditions in Cuba last summer were such that it was impossible to 
get the number of vessels to go to Cuba that the Cubans thought 
they needed; they did not really need so many, as it turned out, but 
they thought they did. And the result was that more ships were sent 
to Habana than there were facilities at the port for discharging. 
The steamship Posland sailed in the month of August with a very 
valuable cargo, worth, I think, roughly, about $5,000,000. She went 


46 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

down in normal course and was about a month in the port of Ha- 
bana, and was unable to obtain lighters or a berth at which to dis¬ 
charge. Some misrepresentations, I think, were made to the De¬ 
partment of State, and the vessel w'as permitted to return to the port 
of New York, her hatches not having been opened. 

The bill of lading in that case was a very wonderful document— 
very unusual. It gave them the right to return this cargo to New 
York. In fact, it was rather indicated that that was the original in¬ 
tention; that when the boat left New York there was no apparent 
chance of any discharge at the port of Habana. It also provided 
for payment of a fee for discharging at Habana; also for demur¬ 
rage at Habana; and it also provided that in the event of the vessel 
returning to New York, return freight would have to be paid. 

When the vessel arrived at New York a shippers’ committee was 
organized, w T ith counsel, in order to protect the interests of those 
who had cargo aboard : and the operators refused to release the 
cargo until the charges had been paid. The freight out and these 
charges at Habana had been paid in advance, but the return charges 
the operators insisted on collecting before the cargo could be out- 
turned from the vessel. The shippers refused to do this; but finally 
it was arranged that bond should be put up for the payment of 
this return freight, if it was finally adjudicated that it was clue; 
and the cargo was released after a great deal of delay. 

When this cargo came out, as I have mentioned, a great deal of it 
was found to have been pilfered, some of the cases being absolutely 
empty and others only partially empty. Some of them looked as 
though the goods had been willfully destroyed, without any real 
desire to get at them. But it was also shown that those who had 
done the pilfering had had plenty of time in which to do it; that it 
had been scientifically done; because cases that had been absolutely 
unmarked and would show no trace of their contents, but which were 
the most valuable cases, were those that were pilfered; the shoes and 
razors, and all of those things which are small in bulk but large in 
value, were taken, showing that those who had done the pilfering 
had had absolute access to the manifest of the vessel and were in 
collusion in some way with the people who were interested in the 
vessel. 

That case has gone to the courts, and only last week a decision was 
handed down in the district court for the southern district of New 
York holding that the vessel and the operators—the vessel had been 
libeled—were liable for the theft and pilfering and other damage- 
that had ensued, because of the fact that there was an unexcused 
deviation. 

That is perhaps the most outstanding and the most vicious case 
of theft and pilferage that has come to light so far. 

Mr. Edmonds. Mr. Winter, was there anybody arrested in connec¬ 
tion with that case ? 

Mr. Winter. So far as I know, no one has been arrested. 

Mr. Edmonds. Well, this was a Shipping Board vessel operated 
by the Acme Navigation Co., was it not? 

Mr. Winter. No; it was built for the Shipping Board, but I think 
it was a free boat, owned by the Polish American Steamship Co. 
I simply mentioned that it was a Shipping Board vessel to show 
that it was one of the big, new type boats. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 47 

Mr. Edmonds. There was no investigation to show whether the 
officers and crew were responsible? 

Mr. Winter. So far as I know, there was not. There may have 
been, but I do not know of it. 

Mr. Edmonds. Or any investigation made of the owners? 

Mr. Winter. Well, there was an investigation made of the owners, 
but I am not sure whether that was an official investigation, or 
whether it was an investigation by the counsel for shippers and the 
underwriters. But it was shown that they had had various other 
dealings; that they had been an operating company in New Orleans, 
and had left there rather hurriedly without explanation; but their 
hasty exit could be explained on account of irregular methods. And 
the whole proposition seemed to have been cooked up in advance. 

The steamer Cracow was also a rather unusual case. This vessel 
was dispatched by the same operators, the Acme Navigation Co., 
and went down to Cuba, the same port, under the same conditions, 
and was not able to discharge. I think perhaps there had been a 
little discharge made, but very little; and then suddenly the vessel 
took fire and was completely destroyed. Now, it is very hard to get 
definite evidence; but from what is known it is quite evident—it is 
like one of those Scotch verdicts, “ Guilty, but not proven ”—that 
the destruction of the vessel was brought about in order to cover 
up the theft and pilferage that had been going on in the hold. That 
boat was discharged by the same operators. 

Mr. Edmonds. Was there any criminal prosecution in that case? 

Mr. Winter. So far as I know, there was none. That, of course, 
happened in a port of Cuba. 

Mr. Edmonds. They did not make the captain manager of the line 
afterwards, did they ? [Laughter.] 

Mr. Winter. I do not know. 

Mr. Edmonds. It seems to me that he would be a good man to 
manage for some New York people that I know of. [Laughter.] 

Mr. Winter. For some purposes, he would be excellent. 

'Mr. Edmonds. 1 suppose this question really resolves itself down 
to the honesty and the good intentions of the operator ? 

Mr. Winter. Yes: it does, in a measure. But how can you have 
honest operators and honest shipowners if they can contract them¬ 
selves out of a liability that should be theirs? 

We are advocating" this strict liability on carriers so that there 
shall be one law for all: it is partly for that reason that we are ad¬ 
vancing this; so that an operator could not make shipping contracts 
or issue bills of lading such as were issued in the cases of the 
Cracow and the Posland. It is always unfortunate that the law must 
press equally hard on the guilty and those who are not guilty; but 
you can not make fish and fowl of the same thing. It is absolutely 
liecessary to have a definite, clear-cut legal status. This suggested 
amendment to the Harter Act, 1 feel, is only restoring what was the 
original intention of the Harter Act. Of course, the Harter Act 
has-been so changed by legal decisions and statutes that it has not 
served the original and intended purpose. . 

Mr. Edmonds, Does this Polish-American Steamship Line belong 
to the American Shipowners’ Association? 

Mr. Winter. I do not know. 


48 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Campbell. I would like to suggest, Mr. Chairman, that that 
case ought not to stand as an example of the American shipowner, or 
the Shipping Board operations; and I think inasmuch as the com¬ 
mittee has gone into that case, in order to have your record fair to 
all, you ought to go further into the matter. 

Mr. Lehlbach. You will have that opportunity. 

Mr. Campbell. I am not speaking of that ship; I do not know any¬ 
thing about that. But I do not think the record ought to stand 
merely with a statement as to the case of that ship. That was a most 
extraordinary case, with unusual people; and it is not a fair ex¬ 
ample of the American shipowner. 

Mr. Winter. I want to agree with Mr. Campbell that that was not 
a fair example of the American shipowner; but it only shows that 
those who want to go that far can do so and get away with it. 

Mr. Edmonds. I will agree with Mr. Campbell also. 

Mr. Winter. And it is no reflection on American shipowners. 
Far be it from me to reflect on them. 

Mr. Lehlbach. But it is an example of what is possible under 
present conditions. 

Mr. Winter. It is. 

Commander Lissner. I would like to ask whether you have noticed 
any difference in efficiency in stevedoring between the handling of 
Shipping Board vessels and the handling of other vessels. 

Mr. Winter. Well, I can not speak by the book as to that. But I 
do know that the old-established companies, of course, had the old- 
established stevedores engaged with them, and that it was inevitable 
in operating the Shipping Board boats that new crews, new cap¬ 
tains, new stevedores, etc., should be taken on. In that way the 
Shipping Board boats have been handicapped—not through any 
fault of the Shipping Board, but merely because of the very condi¬ 
tions that existed. With such a comparatively small American 
merchant marine there was a comparatively small number of steve¬ 
dores ; they were all engaged up and continued mostly with their old 
connections, except as they Avere able to develop and take on neAV and 
additional lines. 

Mr. Lehlbach. Are there any further questions of Mr. Winter? 

Mr. Gaines. I would like to ask one. Do you regard all insur¬ 
ance which indemnifies a man against his OAvn wrongful act or 
criminal negligence as being against public policy ? 

Mr. Winter. Against his OAvn? 

Mr. Gaines. Employers’ liability; insurance against liability for 
his oaahi negligence; would you regard that as being, as you say, 
against public policy? 

Mr. Winter. I would only go to a certain extent in that respect. 
It is impossible for the oAvner of a factory, for instance, to exercise 
the same sort of control all along the line that he Avould exercise if 
it Avas but a one-man factory; a factory such as they had in the old 
days, which consisted of one or tAvo men. Then it Avas absolutely 
possible to control Avhat Avent on. But when you have a factory that 
has more than 20,000 people, I do not think you can lay cloAvn the 
same measuring stick for that that you could for the old-style 
factory. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 49 

But I do think that any insurance that undermines the responsi¬ 
bility of those who are, under the old common law, liable for what 
happens is tending against public policy. 

Mr. Kirkpatrick. That is true, however, in all automobile lia¬ 
bility insurance, is it not? There is a one-man operation there. 

Mr. Winter. That is a one-man operation. I do not know much 
about automobile insurance. 

Mr. Kirkpatrick. But it is recognized as not against public policy 
to grant automobile liability insurance everywhere? 

Mr. Winter. Yes; and it is very unfortunate in some respects that 
certain operators can get such insurance. I think in the long run 
you will find that there is a measure of assuming risk there that is 
against public policy. If it were not possible so freely to get auto¬ 
mobile liability insurance, there would be less loss. It is very hard 
to draw the line, because you get into cases that are very different. 

Mr. Lehlbach. Of course, negligence in automobile operation 
runs very frequently into the criminal, and there is no indemnity 
against the criminal law. 

Mr. Winter. No; of course not. 

Mr. Lehlbach. Does your company use the loan receipt against 
losses to obviate the carrier obtaining the benefit of insurance under 
the bill of lading? 

Mr. Winter. We do. 

Mr. Lehlbach. Is it effective? 

Mr. Winter. And we furthermore have been induced to insert 
a clause in our policies to prevent the carriers from exercising that 
right, which they try to claim, of getting the benefit of insurance. 
We have a contrary clause. 

Mr. Lehlbach. That nullifies any such overtures on their part, 
and it is a fight between the bill of lading and the insurance contract ? 

Mr. Winter. Yes; and the insurance company, you see, is doing 
that in order to preserve the rights of the shipper against the carrier. 

Mr. Lehlbach. Will you explain the operation of such a loan 
receipt ? 

Mr. Winter. Well, under the loan receipt, a merchant makes claim 
on his underwriters. The underwriter claims that it is a ship’s 
liability, or a carrier’s liability; he denies liability for the loss to 
the assured. But in order to put the merchant in funds so that he 
may again proceed with his business relations, the underwriter ad¬ 
vances a sum of money—part, usually, of the claim made—under a 
loan receipt which does not admit liability, and under which the 
merchant agrees in the event of recovering from the carrier to re¬ 
imburse the underwriter for the loan made. There is no admission 
of liability; it is just a device for continuing the relation between 
the assured and the carrier, but at the same time enabling the assured 
to go on with his business while the question is being litigated. 

Mr. Lehlbach. And in turn, bills of lading sometimes contain 
this provision: 

That the shipowner or operator shall have the benefit of all loans the 
amount of which have been determined by the total amount, or part of any 
damage to said merchandise, made to the owner by the insurer thereof and 
induced by the existence of insurance upon said merchandise. 

60683—21-4 


50 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Winter. I believe such clauses are in bills of lading; yes. 

Dr. Huebner. And what happens in that case ? 

Mr. Winter. I think in that case the steamship company would 
have a great deal of difficulty in finding that the loan had been 
made. [Laughter.] 

Dr. Huebner. Mr. Winter, have you found a big difference be¬ 
tween different carriers, in the amount of losses, aside from your 
distinction of those who are old operators and those who are new 
operators ? 

Mr. Winter. Yes; there are certain lines that do not have the 
proportion of claims that other lines do. There is a marked differ¬ 
ence in the care given property in the custody of the carriers. 

Mr. Edmonds. Do you think the proposed dual bill of lading, 
having one bill of lading protected and the other open, would be 
practicable ? 

Mr. Winter. I do not. I think, just as Mr. Rush said, that the 
bad bill of lading would drive out the good one. I think it would 
be an unfortunate thing to have two sorts of bills of lading; we 
would merely work back to about where we are to-day if that was 
done; because, really, the bill of lading that would be used would 
be the cheap bill of lading; that would drive out the full liability 
bill of lading. 

Mr. Lehlbach. Do you think the situation could be cleared up 
by a voluntary arrangement between the operators and the under¬ 
writers, or do you think legislation is necessary ? 

Mr. Winter. I think legislation is absolutely necessary. 

Mr. Lehlbach. Could legislation be supplemented by voluntary 
agreement or reformation in the methods of doing business? 

Mr. Winter. Well, I do think that good could be done by con¬ 
ference between the various interests involved, so that we w T ould 
get various angles on the case; but I do not believe much can be 
done in that direction until the vital principle is definitely fixed as 
to where the responsibility shall rest; I think it would be rather 
putting the cart before the horse. If we can definitely determine 
that the liability is to be in one place, why, then everybodv can sug¬ 
gest means of controlling that liability and reducing it. But as it is 
now, to use the vernacular, everybody is “ passing the buck.” 

Mr. Lehlbach. Are there any further questions? We are much 
obliged to you. Mr. Winter. 

We will next hear Mr. Robinson. Please state your full name, 
business, and address for the record. Mr. Robinson. 

STATEMENT OE MR. WADE ROBINSON, MARINE INSURANCE 
BROKER, NEW YORK CITY. 

Mr. Robinson. My name is Wade Robinson. I am a marine in¬ 
surance broker; address, New York City. 

The fact that hearings before this committee are being held and 
the statements of witnesses prove that enormous losses to merchan¬ 
dise in transit have occurred in consequence of theft, pilferage, non- 
delivery, breakage, leakage, hook, sweat and fresh-water claims, these 
losses are—in the absence of a major accident, described by the term 
“ acts of God or perils of the sea ”—ascribable purely to human ne¬ 
glect ; that is, in the absence of such major perils loss would not have 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 51 

occurred if merchandise had been properly packed, handled, and 
safeguarded during transportation. 

The broadest word that may be used to describe the causes of loss 
referred to is carelessness. 

Losses to merchandise in transit increase cost because the con¬ 
sumer is taxed through the premium charges in policies of insurance. 

It is quite certain that extraordinary effort to produce and ship 
the almost unbelieveable volume of merchandise that was handled 
during the war, with the shortage of efficient help in all lines of 
endeavor, was productive of cheapened methods originally devised to 
expedite handling and shipping, and that the main thought govern¬ 
ing export business was quick production and quick delivery, with 
the result that short cuts and careless methods were the inevitable 
vogue. 

It might be argued that now that the war is over and demand has 
lessened and labor is plentiful and good packing material easy to 
obtain abnormal conditions would immediately right themselves, but 
conditions have not changed. 

Shippers have learned bad habits, and the general business de¬ 
pression, coupled with the extraordinary overhead expenses, has pro¬ 
duced a trade condition that has created an even greater temptation 
to carelessness and inefficiency with its resulting handicap in the 
form of costs represented by greatly increased insurance premiums. 

The subject of export packing has been very ably dealt with by 
Mr. C. C. Martin in his address before the foreign trade convention 
recently held. In hs address Mr. Martin shows the importance not 
merely of adequate containers but also of proper packing of merchan¬ 
dise in a manner that will fit the governing circumstances of the 
route over which it will have to travel. He deals with the very 
obvious necessity of making the package suitable as respects size, 
weight, strength, center of gravity, and of protecting it against un¬ 
avoidable exposures by adequate water proofing and by such other 
reasonable means as will safeguard contents against damage from 
without as well as from within, and which will protect it as much as 
possible against thieves. 

Mr. Martin refers to the fact that good packing is easily within 
the range of accomplishment at an expense that will show an actual 
saving over present inefficient methods, and he supports this con¬ 
tention by citing the fact that the Forest Products Laboratory of 
Madison, Wis., a Government institution which is a branch of the 
Foreign Service of the United States Department of Agriculture, dur¬ 
ing the war saved to the Government millions of dollars by redesign¬ 
ing packing cases for overseas shipments. 

T think it will be freely admitted that there is an overabundance 
of poor packing and that a remedy which will prevent and at the 
same time teach the shipper to pack properly, is imperatively neces¬ 
sary. 

It is apparent that a code of practice to govern packing can be 
devised that will serve as a minimum standard of packing quality. 

Obviously this code can and should be prepared by the Govern¬ 
ment Forest Products Laboratory at Madison. This laboratory has 
at hand, already paid for, a vast amount of data and experience and 
skill developed as a result of the war, which can now be realized 


52 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

upon as a form of salvage through the preparation of a code of 
packing practices. 

The laboratory, of course, would be expected to prepare the pack¬ 
ing code in conjunction with representatives of shippers and carriers 
and underwriters’ surveyors. 

I wish to state here that the establishment of a code of practice 
to govern packing is not in any sense to be regarded as mandatory 
or an obligation on the part of any manufacturer or shipper. It 
would be optional with him whether or not he adopts it, but it is 
expected that he would surely adopt it because of the saving in cost 
of packing, freight, and insurance. 

The plan which I shall outline carries nothing in the form of an 
obligation that must be assumed. 

If any features of the plan are objectionable to any interest they 
ynav proceed along usual lines the same as heretofore. 

The consideration of packing is naturally the first thought in con¬ 
nection with the consideration of a shipment of merchandise in tran¬ 
sit from point of shipment to point of destination, and while we 
have considered the character of package or container, we must also 
not overlook the elements of hazard which are embodied in the pack¬ 
ing of a package; that is, in the method employed in placing the 
goods in the shipping container and the morals of the individuals 
charged with this duty. This is important when we consider the 
risks of theft, pilferage, and breakage. 

It is not always easy to determine after arrival of a shipment, 
which has developed breakage or pilferage, whether the loss so caused 
was primarily due to faults in the packing room of the shipper 
or to faults tliat developed after the package had commenced its 
journey. 

Reasonable certainty respecting proper packing and the morals of 
the individuals who do the packing, therefore, should be established 
by a reasonable system of supervision that will insure the employ¬ 
ment of only skilled and honest persons in the packing of merchan¬ 
dise. 

When merchandise starts upon its j-ourney transportation is ac¬ 
complished by means of various forms of carriers, such as truck, 
horse-drawn or motor, lighters, steamboats, canal boats, river and 
harbor craft of various types, railways and ocean-going steamers. 
During its voyage, therefore, the merchandise is in many ways ex¬ 
posed to all the special perils referred to, and inasmuch as all these 
perils are, in the absence of perils which are termed “ acts of God 
or perils of the sea,” solely due to human agencies, it is reasonable 
to assume that through the same human agencies, properly con¬ 
trolled, the special perils may be almost if not wholly eliminated. 

Obviously it is also necessar}^ to provide means to guarantee proper 
handling during loading upon the ocean carrier and the proper 
stowage in the hold of the ocean carrier, and also to see that in 
connection with stowage and general loading of the vessel the danger 
of loss through perils of the sea is not augmented in consequence of 
careless stowage, improper loading, or overloading. 

When an ocean carrier arrives at its destination the process of dis¬ 
charge to shore or supplementary carrier in which the merchandise 
will continue its journey should also be subject to reasonable super- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 53 

vision in order to avoid the special risks referred to, and there seems 
to be no adequate reason for failure to exercise such supervision. 

After merchandise has been discharged it will proceed to desti¬ 
nation, which may be an interior city in a foreign country, and if its 
condition has been properly noted at time of delivery from ship’s side, 
developments thereafter can be identified as a result of the quality 
of skill and care employed in transportation to destination. 

If special perils are to be eliminated, carelessness must be elimi¬ 
nated all along the line of transportation, and there must be substi¬ 
tuted a system that will insure adequate packing and adequate hand¬ 
ling, and this system must begin to operate in the packing room or 
warehouse of the shipper and carry through to the very door of 
the warehouse of the consignee. No system which takes care of only 
a portion of the journey will be adequate. 

It is reasonable to assume that another factor which has largely 
promoted loose and inefficient shipping methods is the success many 
carriers have had in evading responsibility through the introduction, 
of clauses limiting, or in effect eliminating entirely carriers’ responsi¬ 
bilities. This condition seems to have led carriers to accept freely 
merchandise in an utterly unfit condition, and they have withdrawn or 
failed to maintain usual and proper safeguards for the protection of 
merchandise intrusted to their care. 

We must not lose sight of the fact that the term “carrier” is in 
fact a very board term. It includes many forms of carriers, prin¬ 
cipally supplementary carriers, and may even be correctly applied 
, to individuals and agencies who have custody and handling of mer¬ 
chandise between warehouse shelf at point of shipment and ware¬ 
house floor at point of destination. 

It has been suggested that a remedy for existing defects might 
be found in an amendment of the Harter Act and rigid enforcement 
of the same, by which the carrier would be prevented from, first, 
introducing clauses in the bill of lading at variance with the terms 
of the Harter Act; second, limiting value to a nominal sum. 

A little consideration of this suggestion, however, reveals the fact 
that it would not do more than partially cure existing defects, because 
there is infinitely greater actual and potential waste and damage 
embodied in the make-up of individuals who make the case or con¬ 
tainer, pack the merchandise therein, carry it from floor to truck, 
from truck to lighter or ship, and from lighter to ship, from ship to 
lighter or shore, and thence by truck or other land conveyance to 
warehouse at destination. 

The Harter Act applies only to carriers engaged in carrying mer¬ 
chandise from and between ports of the United States and foreign 
ports. A drastic amendment and rigid enforcement of the Harter 
Act against the ocean carrier could have no material effect upon all 
the other, numerous agencies of transportation before and after deliv¬ 
ery to and from the ship. 

Legislation that seeks to regulate the ocean carriers alone would be 
unfair and unjust, unless the same legislation at the same time 
granted to the carrier a form of power that would enable the carrier 
to control all elements having custody of the merchandise before 
receipt by ship and after discharge from ship, and this power would 
have to be extended so as to include the packer and to enable the car¬ 
rier to control individuals employed by supplementary carriers. 


54 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Manifestly the granting of such power to a carrier would involve 
legislation of an impossible character. 

We must not too readily assume that all damage discovered in an 
arrived package occurred after delivery to and while on board the 
ocean carrier. 

When we think of theft and pilferage and the moral hazard gen¬ 
erally, we must bear in mind that the same is in proportion to oppor¬ 
tunity, and that surely the probability of immorality is greater while 
the merchandise is land borne than while it is water borne, because of 
the greater incentive lyisg in the fact that the only market for stolen 
goods is on land, and the landman can more easily develop such a 
market than can the seaman. 

Consideration of corrective measures brings as a very first thought 
a clear necessity, namely, that the corrective system to be just must be 
comprehensive. 

It must apply in just proportion to all the contributory elements of 
carelessness, and must, therefore, apply not only to the steamship 
carrier but to all other agencies participating in the act of trans¬ 
portation. 

At first blush this conclusion seems to present a picture of compli¬ 
cations and small details so numerous as to inspire a quick thought 
that a real remedy is impossible or too difficult. Whatever effort is 
made it must be in proportion to the evil it seeks to correct. 

An examination of the relationship of shipper, carrier, and insur¬ 
ance company reveals a condition that practically amounts to a state 
of three-cornered opposition. 

The shipper seeks to evade expense in the matter of packing. The 
carrier seeks to evade responsibility for damage arising during act 
of carriage. The insurance company seeks to evade ultimate loss 
through collection from the carrier, thereby constituting itself a mere 
guarantor or surety back of the carrier instead of actual insurer, 
and by charging greatly increased rates of premium or declining 
altogether to issue insurance. 

The merchant has saved on packing costs, according to his idea, 
and has accepted any form of bill of lading which the carrier has 
offered, without thought of his obligations under his contract of in¬ 
surance, believing that if loss or damage is sustained he will collect 
from the insurance company. 

The insurance company believes that the shipper by these practices 
secures for himself a saving in packing costs and freight rates at 
their expense. 

Now, it is apparent that any attempt to correct the situation by 
legislation aimed at only one of the parties to the act of transporta¬ 
tion will produce controversy and accentuate antagonism. If we 
are to achieve a state of harmony and profit for right doing we must 
devise as an alternative a purely optional system that will carry 
advantages of convenience and lessened costs so important that it 
will induce adoption by all. 

In a statement recently made before the House Committee on Mer¬ 
chant Marine and Fisheries, Mr. Fields S. Pendleton said: 

For American ships to succeed in foreign carrying they must be fortified in 
some way to meet cheaper foreign competition. This necessitates a protective 
governmental policy. The preferable policy is one that will create such a pref¬ 
erence for the American ships in carrying foreign commerce as to compel ship¬ 
pers to use it. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 55 

My suggestion is that there be two forms of bill of lading, which, 
for the sake of convenience, we shall call form 1 and form 2. 

Form 1 bill of lading will be that form which is now in general 
use and which, through a. very nominal valuation stipulated therein, 
is very limited as respects actual loss to the carrier. There will be 
in this form 1 bill ot lading no variation from actual conditions now 
prevailing. 

Form 2 will be a bill of lading under which the carrier will assume 
the responsibility of providing insurance, covering in a manner coex¬ 
tensive with the voyage from warehouse to warehouse, including land 
transportation, including theft, pilferage, and all other kinds of 
loss or damage which by common practice are at present recognized 
as proper subjects of insurance in connection with a shipment in 
course of transportation. 

This form 2 bill of lading will be based upon and supported by a 
policy of insurance to be issued by a group of insurance companies, 
which policy will be more elaborate and extensive but similar in 
character to forms of pblicies now issued to cover the business of 
freight forwarders and commission merchants, and also similar to 
policies called bill of lading policies, which have for some time past 
been issued to steamship companies and inland carriers. 

These policies cover for the freight forwarder and merchant and 
steamship company and other parties as interest may appear, and 
under the operation of these policies risks are reported by the named 
insured in a manner and at times as provided by the policy. 

It will be observed that insurance is coupled with the bill of lading 
and that the contract of carriage and insurance contract are both 
completed at one and the same time and without separate negotiation 
as respects insurance. 

Form 2 includes insurance not onfy for the benefit of the shipper 
but also insurance for the benefit of the carrier, so that the carrier 
would be relieved of losses arising out of his own liability, subject, of 
course, to certain reservations which I will refer to hereafter. 

The agreement between the carrier and the shipper, by which the 
carrier is obligated to obtain insurance, will contain provisions re¬ 
quiring the shipper to observe clearly defined rules and regulations 
respecting package, both as to quality of the package and manner of 
packing, and to gi\ T e guaranties respecting the good character and 
efficiency of employees engaged to do the packing and employees who 
transport the merchandise from warehouse to ship’s side. 

The plan also contemplates an optional code of practice which 
would provide packages for various forms of merchandise conform¬ 
ing to an agreed standard. All packages so employed by a shipper 
would bear a label or stamp certifying that the package complies 
with standard requirements. 

Part of the agreement betAveen carrier and shipper governing in¬ 
surance will include a warranty on the part of the shipper to use 
only standard packages in connection with shipments made under 
form 2 bill of lading, and if the shipper does not use that particular 
form of package for shipments under form 2 bill of lading, such 
failure would amount to a violation of contract. Should the shipper 
use an inferior form of package, bearing a label certifying that it is 
of standard character, such act would amount to fraud, so that the 


56 THEFT ; ETC.; OF EXPORT AND IMPORT SHIPMENTS. 

shipper would be punished in two ways—he would be compelled to 
bear the burden of the amount of loss and he would be subject to 
prosecution for conspiracy and fraud. 

The release to the carrier by the insurance.company is to be accom¬ 
plished by the terms of an agreement between the insurance company 
and carrier. No unsatisfactory carrier would be acceptable to insur¬ 
ance company. 

In case a shipment made under form 2 suffers loss or damage en 
route, the examination to determine the character and amount of loss 
will reveal the cause and also any deficiencies, which, if they are the 
result of failure on the part of shipper, throws the loss back upon 
said shipper. If, however, the loss is due to deficiencies on the part 
of the ocean carrier in not living up to the requirements of their 
agreement with the insurance company, then the shipper will have a 
valid claim under the insurance, but the company will be entitled to 
recovery from the carrier and the carrier will be liable to the com¬ 
pany in tw T o ways, according to law and according to contract be¬ 
tween the company and the carrier. 

Under this system the shipper will not be left in suspense in con¬ 
sequence of deficiencies on the part of others for which he is not 
responsible and over which he has no control. 

Supplementary carriers may be made parties to the arrangement 
under a system of licensing by a committee or bureau representing 
underwriters, shippers, and carriers. 

The licensing agreement with supplementary carriers will include 
a reasonable code of practice to be observed by the supplementary 
carrier in the handling of merchandise, and the agreement will cover 
not only physical but also moral factors, such as character of crew, 
general system of management and, if found necessary or proper, 
may also include guarantees in the form of a bond of an acceptable 
character. 

It will be noted that the provisions of this optional system under 
form 2 bill of lading may be extended to include railroads as well as 
all classes of carriers, and that it would have the advantage of re¬ 
lieving rail carriers of a vast amount of loss which they now have 
to bear under the existing legal requirements. 

If by an adequate optional system of contracts we eliminate the 
hazards of willful carelessness, we need fear no other hazards except 
the hazards of accident. We should accept the principle that losses 
resulting from accident should fall not upon the carrier or shipper 
but instead should fall upon the natural shock absorber, namely, the 
insurance companies, whose function it is to insure and not act 
merely as guarantors or sureties back of a bill of lading. 

The device of optional contracts between insurance companies, 
shippers, and carriers of various character is to be employed in a 
manner that will establish a direct relation between persons having 
custody of the merchandise and persons upon whom ultimate losses 
fall, ultimate consumer not included. 

By this method it is hoped to accomplish the desired purpose not 
by the amendment of existing laws or the enactment of new laws 
with inevitable controversy, under which condition minds do not 
meet and misunderstandings develop, but instead, by a contract sys¬ 
tem under which all points of differences are discussed and when 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 57 

agreements are reached, will provide reasonable assurance that 
minds have met and that the subject has been disposed of with fair¬ 
ness and equality for all parties. Such a condition can only be 
brought about by a system of contracts the acceptance of which will 
be entirely optional. 

Present systems will not be disturbed in the least degree, and a 
shipper or shipowner who is content with existing arrangements will 
not be disturbed in his privilege to continue such an arrangement. 

The new system, however, would provide ways and means by 
which if the shipper desire, he may secure the benefit of lower costs 
of packing, insurance, and transportation by the adoption of the 
optional plan and likewise, carriers can secure for themselves the 
advantages of the system and increased traffic which the insured bill 
of lading would bring to them. 

Insurance companies would secure a large volume of improved 
risks upon a basis that would guarantee reasonable freedom from 
hazards of carelessness and there would be further advantages to 
the insurance companies in the form of spread of business as to 
number of risks, geographical spread and small average unit of risk. 

Refusal on the part of shippers to adopt form 2 bill of lading 
system would be a frank advertisement of the fact that they are 
probably ignoring the reasonable and proper safeguards that should 
be adopted by them in connection with the packing and transporta¬ 
tion of merchandise. Such plain and concise evidence of their atti¬ 
tude respecting responsibilities would naturally result in the refusal 
of insurance companies to accept insurance upon their shipments 
made under form 1 bill of lading, except at a rate which would be 
substantially higher and probably commercially prohibitive. 

The operation of the system would greatly simplify the determina¬ 
tion of responsibility for loss, including the cause of same and reme¬ 
dies in consequence would be self-suggesting. 

At a recent hearing before the committee of the Senate in connec¬ 
tion with the District of Columbia insurance bill, one of the gentle¬ 
men stated in effect that marine insurance is founded upon shipping 
and anything that adversely affects shipping will naturally have an 
adverse effect upon marine insurance. 

This very obvious truth is often overlooked by those who seek to 
improve the situation for the benefit of marine insurance companies. 

The present is not an opportune time to endeavor to enact legisla¬ 
tion which will penalize or even cause discomfort to shipping interests 
for the benefit of any other interest. 

While existing conditions in some respects afe bad, we must not 
overlook the fact that whatever the present condition is, it is the 
product of transactions involving literally billions upon billions of 
traffic values, and that this vast traffic value represents millions of 
individual transactions. 

Any system that successfully bears the strain of this vast volume 
of business can not be regarded as wholly bad, and it would be sur¬ 
prising indeed if evils in some form or other did not creep in, in con¬ 
nection with such a stupendous volume of business. Their existence, 
however, does not necessarily prove that the system is radically wrong 
in all respects. 

The system is fundamentally correct, but there are opportunities 
for evil practices and the evil conditions such as we now encounter, 


58 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

are not, in fact, the result of the system as a whole, but rather of 
opportunities that are not at present properly safeguarded. We 
should, therefore, merely seek to eliminate these opportunities for 
evil. 

The statement that marine insurance is founded upon shipping 
applies with equal force to shipping; that is, insurance is just as vital 
to shipping as the water upon which that shipping floats. Without 
insurance shipping would be tied up. From this we learn the neces¬ 
sity for cooperation on the part of shipping with insurance. 

The term “shipping” is a compound term. It includes carriers 
and shippers. Without shippers neither carriers nor insurers could 
endure, and it is equally true that shippers could not endure without 
ships or insurance. Here again we learn a truth, namely, that ship¬ 
pers must cooperate with carriers and insurers. 

Cooperation between all elements is beyond any doubt imperatively 
necessary and I respectfully suggest that cooperation can not be ob¬ 
tained by means of legislation or other methods which are founded 
upon force, compelling one against his will in favor of another. 
There must be substituted a wholly optional and inviting system 
which will be used not by virtue of force, but rather by virtue of self- 
interest, arising out of the fact that the new system will promote 
harmony and convenience and reduce costs. 

It has been established as a fact that marine insurance is an essential 
element in the fabric of commerce; that a country which does not pos¬ 
sess its own marine insurance facility is inadequately equipped to en¬ 
gage in world trade, and is therefore at a disadvantage with its com¬ 
petitors. It has also been clearly established that this country does 
not possess an adequate marine insurance facility. 

Admiral Benson says: 

Adequate marine insurance is an absolute requirement for the maintenance 
of a successful merchant marine and the security of America’s foreign trade. 
Marine insurance has been used as ah economic weapon against us. We have 
achieved ship independence. We must now achieve marine insurance independ¬ 
ence. 

We need not discuss the cause of our marine insurance deficiency, 
but it is proper to state briefly what would enable this country to 
acquire an adequate marine insurance facility. This is covered in one 
word, “ demand.” 

If we are to develop an adequate American marine insurance facil¬ 
ity there must first be created a demand for such facility. It is there¬ 
fore apparent that we must ascertain what will produce a demand. 
The answer is: Adequate service at no greater cost than the same serv¬ 
ice may be had for in other countries, and the essence of this thought 
is service and cost. 

Service implies methods by which a desirable thing can be obtained 
with the least expenditure of effort. Cost is the lowest figure, all 
other things being equal. 

The practice of existing American marine insurance facility is 
based upon practices identical with those in force in other countries. 
Service of American marine insurance facility, therefore, is identical. 
It follows that if we are to give superior service we must devise means 
for the negotiation of a contract of marine insurance in a manner that 
will be more uniform, simpler, and more convenient than the mean® 
now prevailing. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 59 

A system under which the merchant can obtain the broadest possible 
marine insurance at the same time and in conjunction with the most 
approved form bill of lading would be a better system than that under 
which freight and insurance contracts are separately negotiated and 
which when accomplished are in a measure opposing documents; that 
is, carriers under present bill of lading conditions seek relief from 
obligations which they think should be imposed upon insurers, and 
insurers seek to fix liability upon carriers via clauses in their policies, 
and the merchant is interposed between the carrier and insurer and 
is ground between the upper and nether millstones to his great dis¬ 
advantage, with the resulting annoyance and inconvenience, and fre¬ 
quent delay and complication in the settlement of his claims. 

Naturally a shipper would prefer a system that would relieve him 
of these difficulties or the possibility thereof, and he would regard an 
insured bill of lading as one which brought to him superior service, 
so that by this means insurance companies operating as parties to bill 
of lading form 2 would be offering superior service. 

Another advantage of the system would arise from the fact that a 
large volume of business flowing through one central channel would 
permit the upbuilding of a statistical system that would give ade¬ 
quate insight into causes of loss, out of which would come self-sug¬ 
gesting remedies and compensating but minimum rates. 

A study of these statistics would produce more accurate estimates 
of loss costs, would provide a more stable practice in the matter of 
rates, and thus improve upon existing conditions under which the 
merchant can never be sure that the rate named to him upon a given 
risk is the same rate as named to his competitor on the same proposed 
transaction. 

A merchant desiring to ship and insure under form 2 bill of lading 
will have the comfort of knowing that whatever rate is quoted to 
him for freight and insurance will be the same rate as quoted to his 
competitor. In this way a standard of costs for insurance will have 
been established, and there will also have been established a standard 
of conditions of insurance in which there will be no ambiguity and 
no deficiencies which do not apply equally to all other shippers en¬ 
gaged in the same trade. 

Here again is an advantage which amounts to superior service, 
which would create a demand for American marine insurance facility 
as embodied in the arrangement under form 2 bill of lading. 

Cost of insurance is the other important consideration in the 
development of demand for American facility. It does not neces¬ 
sarily stop with the rate of premium. It is also affected by expense, 
which in turn depends upon difficulties of negotiation. 

Under present conditions cost of insurance, as represented by 
rate of premium, is an arbitrary figure imposed according to in¬ 
dividual underwriters’ opinions/ When these opinions are finally 
expressed in rates, past experience has taught us that they are 
neither stable nor accurate. They vary according to individual un¬ 
derwriting results and expediency. 

Except in connection with some specific classes of traffic in raw 
materials, there exists no adequate volume of statistics bearing upon 
marine insurance and except in connection with such classes of busi¬ 
ness and hull insurance there is no unity of opinion and no com- 


60 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

prehensive statistics that enable underwriters to name rates that 
are consistent or uniform. In consequence there is a wide difference 
in rates, which, when found to be inadequate, result in a general 
effort on the part of underwriters to retrieve from one class of 
business, losses sustained in another, and to make up in a short time 
through increases in rate, losses sustained as a result of previous 
deficient charge. 

If insurance risks were concentrated and forced to flow through 
one central channel as, for instance, under form 2 bill of ladings 
system and division of the risks were made upon a prearranged 
percentage basis among companies, we immediately would bring 
into being a system which would provide for adequate statistics cov¬ 
ering a volume and diversity of business which would enable un¬ 
derwriters to name rates that would be uniform and consistent, so- 
that there would be no handicap upon any one shipper to his detri¬ 
ment in competition with others. 

It is, perhaps, proper to refer briefly to some of the advantages 
the proposed system would bring to insurance companies, which 
advantages would reduce expense or cost of handling business, 
which in turn would be reflected in reduced cost of insurance to 
shippers, and finally in reduced cost to consumer. Prominent among 
these benefits are the following: 

Prompt payment of premiums, because insurance premiums would 
be paid at the same time and in conjunction with the payment of 
freight. This would eliminate to that extent suspense accounts 
and expensive bookkeeping systems now necessary to keep track 
of premiums. It would also provide for the companies additional 
interest earnings in no small amount. 

There would be a saving of expense through the handling of re¬ 
ports of risks and settlements of claims through one central bureau 
in bulk, instead of in detail, as at present. 

The system would guarantee uniform practices, uniform settle¬ 
ments, based upon actual liability, to which there would be at¬ 
tached no uncertainty, and this would carry benefits in the matter 
of reserves for outstanding losses through the removal of uncertain¬ 
ties by the ability of the companies to pay promptly, and also thereby 
maintain good will toward the system on the part of shippers, with 
consequent cumulative benefits to the companies. 

There would be relief from the expense and burdens of the pres¬ 
ent cumbersome system of issuing policies and certificates, because 
insurance being automatically completed with the issuance of the 
bill of lading, there would be no need for a special certificate, or, as 
in some cases, a great number of special certificates, to complete 
documents necessary for banking purposes, and in connection with 
this feature there would be the added advantage through the elimi¬ 
nation of opportunity for error, which might result in complica¬ 
tions or substantial loss through such errors or deficiencies, arising 
in connection with the issuance of certificates. 

The possibilities of errors and losses arising therefrom is clearly 
illustrated by the fact that there has come into existence a form of 
insurance intended for bankers which provides protection for bank¬ 
ers against omissions or errors or lapse of insurance. 


4 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 61 

A condition which creates a demand for insurance of this charac¬ 
ter to bankers is a condition which needs immediate remedy, if a 
remedy is possible. 

If we eliminate the necessity for separate insurance documents 
and provide a system under which insurance is automatically ef¬ 
fected on the basis of standard conditions, the remedy is provided 
and there could be no possibility of doubt, deficiencies or omissions. 

Manifestly, bankers would welcome a system providing perfect 
security of an undoubted character, and this would tend to aid in 
financing and in the general conduct of export business, an advan¬ 
tage the importance of which should not be overlooked. 

As a practical beginning in the employment of the dual bill of 
lading system, I suggest that the Shipping Board should enter into 
an arrangement with insurance companies which will provide for 
shippers the benefits and advantages that would accrue under the 
•system outlined. 

The Shipping Board controls and operates a vast fleet. The traf¬ 
fic by those vessels, if brought under the control of the arrangement 
suggested, would constitute a nucleus for improvement, and the im¬ 
portance of this nucleus is enormous, because the traffic handled by 
the Shipping Board is enormous and will be still greater. It would 
serve as a basis of solid business intelligently controlled along con¬ 
servative and fruitful lines. The insurance companies participating 
would immediately acquire a substantial amount of improved busi¬ 
ness free of the hazards of c arelessness, and through that fact there 
would be established and maintained a facility for marine insurance 
that would be capable of furnishing insurance to American ship¬ 
pers on a basis of improved service at less cost. 

If the arrangement is entered into by the Shipping Board it would 
serve as a model for all other shipping interests and would probably 
result in identical arrangements being made to cover traffic by in¬ 
dependent shipowners. 

The Shipping Board would benefit through the fact that traffic 
would be attracted to Shipping Board vessels by virtue of the im¬ 
proved service and lowered cost of insurance, in contrast with ex¬ 
isting conditions, under which shipments by Shipping Board vessels 
can only be insured at rate$ substantially higher than charged for 
shipments by other first-class vessels engaged in the same trade. 

It is clearly evident that if all hazards due to controllable human 
elements are eliminated and the risk is rendered as perfect as possi- 
be, it should and would take the lowest rate charged for any other 
risk in the same trade. 

Finalty, I wish to draw your attention to the fact that this pro¬ 
posed system involves nothing in the form of legal requirement that 
does not now exist, and, further, that the plan contemplates no re¬ 
form in methods or practices which would not be absolutely neces¬ 
sary to the success of any other plan; that the adoption or use of the 
system suggested under form 2 bill of lading is in no sense obliga¬ 
tory. but is wholly optional, and would be used by the shipper only 
if it presents advantages in convenience and cost over and above ex¬ 
isting conditions; that this system can and should be so devised that 
it will serve the purpose of a model method which, if followed, 
would produce the ideal condition under which th*e shipper may have 


62 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

a domestic marine insurance facility coupled with improved service 
at less cost. 

Mr. Lehlbach. Mr. Robinson. I think you stated that to bring 
about a remedy of the present situation no legislation of any sort 
would be effectual; you could think of or suggest no legislation that 
would tend to help a reformation of the situation ? 

Mr. Robinson. I could think of no legislation which would cure 
the situation, which would go through in such form, or, rather, come 
out in such form finally, and at such time as to be of benefit and be 
the cure which is immediately needed. 

Mr. Lehlbach. The system which you have designated as form 
No. 2 bill of lading would imply improved methods in safe guard¬ 
ing cargoes b}^ ship operators, would it not ? 

Mr. Robinson. Absolutely; it implies all the improvements which 
are sought to be effected by legislation. 

Mr. Lehlbach. And the form 2 bill of lading would naturally 
cause more care in safeguarding cargoes than form 1, would it not? 

Mr. Robinson. It would. 

Mr. Lehlbach. But the cargoes all go on the same ships? 

Mr. Robinson. They do. 

Mr. Lehlbach. Well, why would a merchant benefit by paying 
No. 2 bill of lading, if he can get the improved service and the in¬ 
creased safeguards under No. 1, at the expense of those who buy a 
No. 2 bill of lading? This is an optional proposition. 

Mr. Robinson. Perils of two kinds beset merchandise. We will 
say that merchandise that goes under Form No. 1 is beset by certain 
perils. Merchandise that goes under. Form No. 2 is beset by the same 
perils; but the merchandise that goes under Form No. 2 presumably 
will have better protection and better care by virtue of the fact that 
it is identified by the markings and labels on it; that merchandise 
will be stowed in special holds, and will get the attention of persons 
who will arrange to see that it is cared for. 

Mr. Lehlbach. Then under a Form No. 1 bill of lading a ship¬ 
owner divests himself of that reasonable degree of care which under 
the law the shipowner is supposed to exercise? 

Mr. Robinson. The same law will be in force; the same system 
will be in force; the same incentive will be in force. 

Mr. Lehlbach. Now, if this system is desirable, and if it can not 
be expedited by any legislation; if it is purely a voluntary arrange¬ 
ment. why have not any steps been taken in the light of the in¬ 
creasing waste and loss which has been apparent ? 

Mr. Robinson. That I do not understand myself. 

Mr. Lehlbach. If it is purely an optional system, how can it 
become effective, if no pressure through legislation or otherwise is 
brought to bear upon the parties w r ho must necessarily enter into it ? 

Mr. Robinson. I take it for granted that the present situation is 
so bad that shippers can not be sure of two things: They can not 
be sure that their merchandise will arrive safely and in good shape,- 
and they can not be sure that they will be able to get insurance; in 
many cases they can not get insurance: the tendency of insurers 
is to cut out insurance frills. Now% the frills, or special clauses, or, 
if you please, hazards, that occur before the merchandise is actually 
loaded on the ship*, are what they object to. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 63 

Mr. Lehlbach. Well, is improved packing a safeguard against 
theft or pilferage? 

Mr. Robinson. I should say it is, from the attitude of the insur¬ 
ance companies, which require inspection of the packing, and in 
some cases require a special form of packing. 

Mr. Lehlbach. You have admitted that this element of loss in 
commerce is serious at the present time—loss due to theft, pilferage, 
nondelivery, etc.? 

Mr. Robinson. I do not admit it; I state it. 

Mr. Lehlbach. Pardon me—you state it. Do you think that an 
appreciable factor in this loss is lack of reasonable safeguarding and 
care by ship operators against loss by theft and pilferage at the 
present time? 

Mr. Robinson. I think there is a lack of safeguarding at the pres¬ 
ent time. 

Mr. Lehlbach. And do you not think that legislation which would 
impose the duty of such reasonable safeguards, which at common law 
were placed upon a common carrier, w^ould tend to cure the situation, 
even if your plan would very much more materially help it? 

Mr. Robinson. The point I wish to make there is that the minute 
you start imposing legal liabilities upon a ship carrier, or any other 
element in the act of transportation, he gets back of it; he immedi¬ 
ately thinks something is being done to him personally; and if the 
legislation goes through, he thereafter spends all his time and effort 
in devising ways and means to get away from that. They have been 
very successful in doing so up to date, and I think they might be 
successful again. 

Mr. Lehlbach. Well, is not the effect of such legislation, not the 
placing of unusual liabilities upon the ship operators, but putting 
back upon them common law liabilities of which they have, through 
the evasion of the common law and statute, divested themselves ? 

Mr. Robinson. It would be an ideal condition if, when the shipper 
gets a bill of lading, he 'could be sure that he would recover the 
amount of any damage to that shipment, whether it is injured while 
going over the line of the carrier that has issued the bill of lading 
or not. That would be an ideal condition,'but I do not think that 
ideal condition can be brought about. 

Mr. Lehlbach. If I own an automobile and it is destroyed or 
damaged through the negligence or carelessness of another, I re¬ 
cover from my underwriter; but that underwriter steps into my 
shoes and has a right to recover from him whose negligence occa¬ 
sioned the loss, where, logically, the loss should fall. 

Mr. Robinson. That is true: but another underwriter pays yours. 

Mr. Lehlbach. Do you believe it a proper practice for ship oper¬ 
ators not only to divest themselves of such liability as arises from 
their negligence but to take advantage of and set off, as against their 
liability, what an underwriter pays the shipper ? 

Mr. Robinson. No; I do not, unless under a contract to tl\at effect. 

Mr. Lehlbach. Well, is that not the practice to-day? 

Mr. Robinson. That is the practice to-day. 

Mr. Lehlbach. And would not legislation to prevent that be 
helpful ? 


64 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Robinson. If you could get that legislation through; if you 
could get such legislation through in such form that it could not 
be evaded. 

Mr. Edmonds. Mr. Robinson, I would like to get the question of 
the liability under the Harter Act straightened out. Now, the Harter 
Act applies to a ship. The insurance that you put on pilferage ap¬ 
plies from warehouse to warehouse? 

Mr. Robinson. Yes, sir. 

Mr. Edmonds. Where does the liability of the ship start, and 
where does the liability of the ship stop ? 

Mr. Robinson. Well, under the suggested amendment of the 
Harter Act, if the damage occurred before the goods reach the ship* 
the shipowner would have to stand the loss. 

Mr. Edmonds. In other words, in those cases the shipowner would 
still be liable ? 

Mr. Robinson. Yes; and it might happen in the warehouse of the 
shipper. 

Mr. Edmonds. And under the present Harter Act as it stands to¬ 
day, if there were liability in force it would affect goods only while 
they were aboard ship and while they were under ship’s tackle? 

Mr. Robinson. If the carrier’s bill of lading began to attach in 
the interior point where the shipment originated, then, of course, the 
carrier is responsible, no matter where the loss occurred, so long as 
the shipper received the bill of lading and did not receive the goods. 
But there is the trouble; the carrier will always object to being made 
liable for any loss that occurred before he got the shipment, even 
though it occurs in the custody of a supplemental carrier with whom 
he has a contract. 

Mr. Edmonds. Therefore, he gets relieved from that in his bill of 
lading and makes his responsibility start from the time the shipment 
goes on the ship until it leaves ship’s tackle ? 

Mr. Robinson. Absolutely. 

Mr. Edmonds. Suppose 1 was a ship company and I should lease 
a ship or charter a ship, and it was runing in my line and the ship 
belonged to you. There is a shipment going on that ship, we will 
say, to Liverpool, and it goes on your ship. Could that ship be made 
liable for a loss that might occur on land before it got on the ship ? 

Mr. Robinson. That would depend entirely on the contract of the 
carrier—the bill of lading. 

Mr. Edmonds. Would the contract of charter that I made as an 
operator with you leasing your ship bind your ship to pay for a loss? 

Mr. Robinson. No; you would be the responsible party. 

Mr. Edmonds. I would be personally responsible; and yet the law 
says the ship is the responsible party ? 

Mr. Robinson. In such cases; yes, sir. 

Mr. Kirkpatrick. I think Mr. Lehlbach’s first question has not 
been answered—at least not exactly to my satisfaction. I do not see 
why thq class 1 bill of lading shippers would not be getting the benefit 
of precautions taken to protect the class 2 bill of lading shippers. 

Mr. Robinson. They would. 

Mr. Kirkpatrick. For instance, suppose they went to the point 
of employing armed guards to take care of class 2 shipments; they 
certainly would not instruct the guards to allow the class 1 matter 
to be pilfered or carried away under their eyes? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 65 

Mr. Kobinson. That is true. But would not that be a benefit in¬ 
stead of a detriment ? 

Mr. Kirkpatrick. Yes; but the class 2 shippers would be carry¬ 
ing the load for the benefit of the class 1 shippers ? 

Mr. Robinson. But the class 2 people would not be responsible for 
loss or damage that occurred prior to the shipment being placed 
aboard ship; in any event the good shippers are carrying the load of 
bad shippers now and its weight is unbearable. There are evils that 
would be so substantially less than they are now that there would be 
a great advantage. Now, if a bank wants to advance money upon a 
bill of lading, they are not going to advance it upon bill of lading 
of form No. 1 on the theory that it is going to be protected indirectly 
in that way. 

Mr. Kirkpatrick. Well, it might go that far. I am not sure that 
it would not. 

Mr. Lehlbach. Tou stated that under the legislation suggested 
with regard to making impossible the evasion of liability for negli¬ 
gence of shipowners, they would be rendered liable for acts or losses 
in transit before the goods actually came into their possession—losses 
while in the possession of the land carriers. Now, the only suggestion 
that has been made with regard to legislation that has come to my 
notice is to restore liability under section 1 of the Harter Act. Do 
you consider that that places upon ship operators any liability for 
loss before the goods actually come into their physical possession? 

Mr. Robinson. Yes; I think it would. It would operate in this 
way: Under a through bill of lading the ship is the last party to 
have the goods; if he does not clear them out in proper shape, it is 
presumably responsible for them. 

Mr. Lehlbach. Yes; but he looks at them before he puts them in 
his boat, does he not? 

Mr. Robinson. He does; but he can not always tell their internal 
condition. 

Mr. Lehlbach. And they being in his possession and under his 
control, would' it not be easy for him to produce the evidence to 
show that whatever had been taken from the case, etc., was not 
taken in the hold of the ship? 

Mr. Robinson. I do not see how the shipowner can tell what has 
been taken out of a case, or broken in a case, where it does not show 
externally that it has been tampered with. A shipment begins, we 
will say/ at Chicago, and is destined for an interior point on the 
other side. If you get an insured bill of lading you are guaran¬ 
teed, first, that the package is proper; that the packing is satisfac¬ 
tory, and that it will be handled only by those persons who are ap¬ 
proved of by a license system to carry the goods from the ware¬ 
house to the’railroad; and when it is on the railroad it will receive 
special care, go forward in special cars along the line until it ar¬ 
rives at the ship’s side, and there it will again be checked by per¬ 
sons who will watch over it; and when it goes into the ship’s hold 
you will have reasonable guarantee that it is in good condition. 
And when it comes out, if there is proper supervision, you will then 
see what has happened while it is in the ship. If it goes forward 
in perfect condition, and if it arrives on the other side in an imperfect 
condition, you will have a reasonable right to assume that whatever 

60683—21 - 5 


66 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

happened to it took place after it arrived on the ship; and then 
you will know where the accident took place. 

Mr. Lehlbach. Under such a blanket insurance all those engaged 
in the handling and transportation of such merchandise would bear a 
proper percentage of the premium cost, would they not—the ware-, 
houses, the railroads, the stevedores, the ship operators, the dock 
operators at the point of destination, and so on? Would that not 
tend to constant bickering and recrimination among these various 
interests, some of them claiming that they are paying for insurance 
against the railroad, or against the warehouseman who is not ex¬ 
ercising, in their judgment, a reasonable and fair degree of pre¬ 
caution, but is trying to save the expense such reasonable precau¬ 
tion might entail, thus increasing the expense of these others and 
increasing their premium rates? 

Mr. Robinson. The agencies of carriage are the agencies that 
have control. If the agencies of carriage get to fighting among 
themselves we will have an ideal condition; all the evils will disap¬ 
pear, because the good agencies will bring pressure to bear upon 
the bad agencies. And those agencies, being connected with each 
other, will naturally know how to bring about reforms. 

Mr. Edmonds. Let us take, for example, 10 packages going from 
Chicago over to some interior point in Europe. Now, those pack¬ 
ages leave the factory in Chicago and the railroad receipts for them, 
even though it is a joint bill of lading with the shipping line the 
railroad receipts for them? 

Mr. Robinson. Yes, sir. 

Mr. Edmonds. Then it is delivered at the pier of the steamship 
company and the steamship company receipts for the shipment in 
good condition. If they do not they are not doing business prop¬ 
erly. I should say that it was a rough way of doing business if 
they do not. 

Mr. Robinson. I should say they do. 

Mr. Edmonds. When a man receipts for the shipment on the pier, 
and it is receipted for in good condition, then it goes on the ship 
and is carried to the other side, and somebody ought to receipt for 
it there in good condition. I do not know whether they do it to-day, 
but it seems to me that with these receipts, given in transit from one 
carrier to another, it ought to be very easy to place the loss. Of 
course, I do not know. I am not quite sure whether the Harter Act 
under a joint bill of lading would cover the shipment from Chicago 
to New r York, we will say; I can not see how it would make the ship¬ 
owner responsible for the loss. But the minute they receipt for those 
goods in good condition at the pier I should think they would be 
responsible for the loss. 

Mr. Robinson. If they receipt for a package in good condition, it 
seems to me, they are responsible. I do not know that a carrier 
attempts to evade his responsibility in such a case, except as stated 
on his bill of lading, which means that he is liable only for a very 
nominal value. 

Mr. Edmonds. I see; you have not really had any test of that, be¬ 
cause the carrier has always evaded his liability at the start. It is 
an immaterial matter to him whether they come in in good condition 
or not under the circumstances. 


THEFT, ETC., OF EXPORT- AND IMPORT SHIPMENTS. 


67 


Mr. Robinson. The point I want to make is that the shipment 
should receive the extreme of care and precaution all the way through 
from the point where the shipment originates, the packing house or 
the merchant’s shelves, throughout to destination, and that can only 
be accomplished by care and proper supervision, and that care and 
proper supervision can only be had if it is under a system by which 
the various carriers agree to do it, and failing to it then they become 
responsible. 

Mr. Edmonds. Well, you have given a great deal of thought to this, 
and of course we have had a good deal of correspondence over it, and 
I have been much interested in your letters—they are very interest¬ 
ing—and 1 think it is well worth taking up the time of the committee. 
The statement or brief which you have read virtually covered the 
whole subject. Of course, the committee will carefully consider what 
you have said. 

Mr. Robinson. Well, it is not very easy to answer some of these 
questions. They are very broad. 

Mr. Edmonds. Of course they are; but the committee wants to get 
the general information to enable it to know what the present trade 
conditions are, what the real way of doing things is—not the theory 
but the real way. 

Mr. Robinson. I agree with all that has been said; that there are 
evil conditions, and that they must be remedied. And I think they 
should be remedied by a system which operates in a benevolent way, 
which brings the various parties who are now in a more or less an¬ 
tagonistic position together and enables them to meet around a table 
and work out a system of contracts, and then work up a bill of lading 
based on these contracts. And that bill of lading will be as perfect 
as the shippers and the carriers can make it. Then you do not have 
a three-cornered opposition., but they will work together and not on a 
basis where they say that a man has acted illegally and will be pun¬ 
ished in such and such a way. Because when that state of affairs 
had developed you will find that spirit of antagonism which will 
prevent the completion of the original idea of perfect responsibility 
of carriers. 

Mr. Edmonds. I am very much under the impression, however, that 
you would find, in order to get sufficient companies together and to 
get a definition of liability made between these companies, that it 
would be necessary to do something with the Harter Act in order 
to keep it going. In other words, a system like this might be carried 
out or might not be carried out, without some backbone to it; you 
would need backbone of some kind. 

Mr. Robinson. Do you not think that if a merchant had an op¬ 
portunity to take a perfect bill of lading, such as I think Form No. 2 
would be, he would demand that and that the demand would natu¬ 
rally force the carrier to give it to him ? 

Mr. Edmonds. Yes; but if the merchant found that the man with a 
No. 1 bill of lading was getting as good protection as he was with 
No. 2 he would naturally stop taking out No. 2 bill of lading and take 
No. 1; and the result would be that the majority of the cargo would 
be shipped under No. 1 bill of lading, and we would come back to the 
same evils that we now have. 


68 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Robinson. Well, No. 1 bill of lading would not have the 
checking system back of it, and shortages, pilferages, etc., would 
take place just the same; and it would not be very easy to make the 
merchant think it would go through just as safely; and also it would 
be hard to find a banker or a consignee who would accept a No. 1 
bill of lading, because that carries with it a lack of the precautions 
which would insure safe arrival. 

Mr. iEdmonds. That would be true at the start. But gradually it 
would develop to a point where they would say, “ Let it go by No. 1, 
it does not make any difference.” 

Mr. Robinson. Then I say that if the system was established and 
if it worked such great benefit that a cargo could go forward on a 
bill of lading No. 1 as safely as on No. 2, we would have done some¬ 
thing very handsome. 

Mr. Edmonds. Except that then we would fall back to this pres¬ 
ent system, and everything would have to start over again. 

Mr. Robinson. No ; by establishing good practices we would have 
brought about a change. 

Mr. Edmonds. You think we would get into good habits in that 
way ? 

Mr. Robinson. We would get into good habits; yes. 

Mr. Lehlbach. Mr. Robinson, it has been suggested here by pre¬ 
vious witnesses that there is no inducement, no compelling motive, 
for ship operators to join with underwriters and shippers and volun¬ 
tarily increase the liability which they now have. Would it not be 
necessary, probably, in order to induce ship operators to see the ad¬ 
vantages to themselves, as well as to others, of your form No. 2 bill 
of lading, to replace upon them the liability of which they have 
divested themselves ? 

Mr. Robinson. That remark implies that the shipowner would 
not want to abandon his present lax methods in favor of a good sys¬ 
tem, because he has advantages which accrue to him under the lax 
methods. 

Mr. Lehlbach. Now, may I ask this question right here—it may 
be an interruption: But under the present system, have you any per¬ 
sonal knowledge as to safeguards and precautions that are now taken 
by shipowners against that and if so, what precautions do they 
take ? 

Mr. Robinson. I have no personal knowledge of that; I have only 
the general knowledge that comes as a result of having heard of 
losses. It is my belief that if proper safeguards were adopted, the 
losses would be a minimum. I do not think the losses can all be 
eliminated. 

Mr. Lehlbach. If it is to the advantage of shipowners to volun¬ 
tarily take those safeguards, why do they not take them? 

Mr. Robinson. Because it is not to their advantage to take them; 
it costs them money to take safeguards. They are just as keen on 
expense as the carriers are. 

Mr. Lehlbach. Would it not cost them money to go into the Form 
No. 2 arrangement? 

Mr. Robinson. If you mean shipowners, yes. But they will not get 
traffic unless they go into Form No. 2 arrangement, if that systenT is 
adopted. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 69 

Mr. Lehlbach. Well, if the shipowners all stayed out of the ar¬ 
rangement, how would you get your goods across the water? 

Mr. Robinson. I would suggest that the Shipping Board take the 
matter up and establish a model system. 

Mr. Lehlbach. Is it not the present theory, or the present plan, 
to have the Shipping Board have as little concern with direct opera¬ 
tion of ships as possible, and that there should be independence in 
method and procedure by the shipowners? 

Mr. Rqbinson. If the Shipping Board does not intend to operate 
and carry cargoes, of course it would not be able to establish a model 
system. 

Mr. Edmonds. I think that would come under the supervisory 
powers of the Shipping Board anyhow. 

Mr. Robinson. Yes; and if the Shipping Board did adopt this sys¬ 
tem and use it in connection with ships that they operate themselves, 
they might pass it on when those ships are disposed of. 

Mr. Edmonds. Not only that; but under their supervisory powers 
a serious question like this would be in their hands to determine. 

Mr. Robinson. Yes; and I think there may be a difficulty in get¬ 
ting the shipowners to take action to get this thing started; and for 
that reason I think the Shipping Board has an opportunity to act 
in a beneficial and moral way to start the system, just to show how 
easily merchandise can be properly handled, to the end that it will 
arrive in a safe condition. 

Mr. Edmonds. When you say the Shipping Board, I suppose you 
mean the new Shipping Board might operate in a moral way? 
[Laughter.] 

Mr. Robinson. I mean the Shipping Board as it ought to be. I 
think the Shipping Board should cooperate with shippers and in¬ 
surers in an effort to produce a perfect bill of lading and a model 
code of practice to govern shipping transactions. Such an effort 
would amount to what may be called practical research work that 
would develop possibilities and impossibilities. If the Shipping 
Board does not want to carry or risk the added expense actual and 
possible through losses, then let insurance companies help the good 
work along by insuring all or 9 , part of the added liabilities the 
Shipping Board would incur. 

Merchants and insurers are part owners of the Shipping Board 
vessels. I can think of no greater service the Shipping Board can 
render to its owners than by helping to develop a cure for a situa¬ 
tion that threatens our entire overseas trade and is an equal menace 
to the Shipping Board itself. 

Mr. Leiilback. Are there any further questions of Mr. Robinson? 
If .not, the committee thanks you, Mr. Robinson. 

(Thereupon the subcommittee took a recess until 2.30 o’clock p. m.) 

AFTER RECESS. 

The subcommittee reassembled at 2.30 o’clock p. m., pursuant to 
recess. 

Mr. Edmonds. Mr. Osborn, we will proceed, if you are ready. 
Please state whom you represent. 


70 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

STATEMENT OF ME. FEANK H. OSBORN, OF NEW YORK CITY, 

EEPEESENTING CEETAIN MARINE INSURANCE COMPANIES. 

Mr. Osborn. I am one of the managers of the Atlantic Marine 
Department of the Firemen’s Fund Insurance Co., and also of the 
Home Fire & Marine Insurance Co., of California, and United States 
manager of the Scandinavian & American Assurance Corporation, of 
Christiania, Sweden. 

I want to say before reading this little memorandum that I have 
written on the subject of losses by theft, pilferage, and nondelivery, 
that I indorse everything that Mr. Winter has said on the other 
subjects of breakage, leakage, bad stowage, and so forth. I have not 
covered any of those points. 

I also want to indorse completely Mr. Rush’s suggestions for cor¬ 
rective measures. 

With your permission I will read the following memorandum 
which I have prepared. | Reading:] 

Extent of losses by theft, pilferage, and nondelivery: Prior to the war, 
claims due to these causes were quite rare. No charge was made on ship¬ 
ments of merchandise to and from Europe with poss bly the exception of 
Russia, Turkey, and Greece; whereas, at the present time underwriters are 
losing money with charges of from f per cent to and from United Kingdom 
to 3 per cent to and from Italy and 5 per cent to and from Portugal. Cover¬ 
age of this character on merchandise to Russia, Turkey, and Greece is virtually 
unobtainable at any rate now and the same is practically true of Germany, 
Austria, Poland, Czeehoslavakia, Rumania and Jugoslavia. 

Prior to the war, only nominal charges were made in connection with ship¬ 
ments of merchandise to Mex co, Central America, West Indies, north and east 
coasts of South America, China, Japan, and the Phil ppines, with no charge 
to Australia and New Zealand. Rates of I per cent to 1 per cent were charged 
to the west coast of South America. At the present time, the rates to these 
various destinations range from 1 per cent as a m'nimum to 10 per cent and 
even 15 per cent. 

All of the above refers to merchandise only moderately susceptible to theft 
and p lferage; such merchandise as wearing apparel of every description, 
cutlery, leather goods, silks, laces, and cotton and woolen piece goods in cases 
are virtually uninsurable. 

As an example of that I will state, outside of my memorandum, 
that I looked up this matter of theft and pilferage and I found that 
early in 1919 they were obliged to increase the rates on ordinary mer¬ 
chandise from Cuba from one-eighth of 1 per cent to one-fourth 
of 1 per cent. At that time we thought we had possibly corrected 
the whole situation, and possibly might make a profit. At present we 
are charging 2-|- per cent bv approved liners, and 5 per cent by other 
vessels, and losing money. [Reading:] 

Early in last March, eight New York offices comb’ned their figures of theft, 
pilferage, and nondelivery, losses paid for the preceding months, viz.: Novem¬ 
ber and December, 1920. and January, 1921. The aggregate figure was $1,204,- 
073.21, being at the rate of over $4,800,000 a year for the eight offices only. 
Until quite recently, much lower rates for tlr's cover were obtainable in London 
than here and a very great deal of business was sent to London. I think it is 
safe to assume that the other offices in this country and the London under¬ 
writers, during the same three months, paid at least half as much as the e'glit 
offices above referred to, which would indicate an annual loss of nearly $7,500,- 
000 on shipments of merchandise to and from the United States. 

I want to elaborate again on that by saying that the figure is un¬ 
doubtedly too low. It is hardly conceivable that all the rest of the 
markets paid only half as much as the eight offices to which I have re- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


71 


ferred. 1 urther, I overlooked entirely the losses sustained by ship¬ 
pers who carried no theft and pilferage insurance; also on the ship¬ 
ments which are insured in the country of origin coming to this 
country; and also shipments from this country which are insured in 
the countries of destination. There is a very considerable amount of 
such insurance. [Heading:] 


I am told that the trade competitors of this country, the leaders of which are 
England, France, and Germany, are also suffering to a considerable extent with 
this country, but I do not believe to anything like the same extent; at least the 
insurance rates charged in those countries do not indicate it. However, it must 
be said that the underwriters of those countries, at least of England and France, 
do not grant the liberal coverage which is given by underwriters here, and the 
shipper having a financial interest in the safe delivery of the goods takes greater 
pains in packing and in claiming losses from carriers. 

The situation is therefore serious from the standpoint of the foreign business 


of the United States, and, consequently, of the future of the American merchant 
marine, not to mention the marine-insurance business of this country, the vol¬ 
ume of which naturally depends on the success of the first two factors men¬ 
tioned. 

Suggested remedies and constructive measures; First and foremost. It is, in 
my opinion, the prevention of issuance of bills of lading by carriers exempting 
them from responsibility for their own misdoing and neglect or that of their 
employees, or limiting their liability. It is quite true that the present situation 
is due in part to a general breakdown of the morale of the world due to the war, 
but it is equally certain that it is due in part to the indifference of the carriers 
who have recently found means to evade their responsibilities or limit them to 
absurdly low figures. It must he remembered that prior to the war when theft 
and pilferage was hardly considered a factor in the insurance of the imports and 
exports, that the present limitations in bills of lading did not exist and the 
carriers maintained proper watch service and otherwise looked after the goods 
entrusted to their care, for their own protection. Were this situation restored, 
I feel safe in saying that the waste from this cause would be reduced at least 
50 per cent, probably more, and this at a cost to the carriers of a fraction of 
the amount saved. I am certain that it was never the hitent of the Harter Act 
(the true intent of which I believe to be for the benefit of the country) to in\ any 
way exempt the carrier from a proper measure of responsibility. 

The enactment of legislation amending the Harter Act as suggested, will not, 
I believe, act as a handicap to the American Merchant Marine as it will apply 
equally to foreign flagships. 

Second. Adequate packing by exporters of merchandise and insistance on the 
same by importers is of very great importance. I believe nearly all of the 
marine insurance companies have been doing constructive work along this line. 
We, for instance, have an expert merchandise packer in our employ who spends 
his entire time visiting factories and warehouses from which goods which we 
insure are shipped, instructing the manufacturers and shippers in the proper 
method of packing for export and calling to their attention the latest improved 
devices in securing cases and packages of goods so that pilferage is difficult if 
not impossible. Of course, the theft of entire packages does not depend upon 
packing method and can only be prevented by watchfulness on the part of the 
carriers. I am told that American exporters have always been at a disadvan¬ 
tage in competition with their European rivals in the markets of the world due 
to^inadequate packing and protection of the goods shipped, not only from theft 
and pilferage but also from seawater and exposure. Naturally, the foreign 
buyer wants his goods delivered to him when he requires them for his trade 
anil also wants them in good condition. I think this is a matter which should 
!*0£0}y0 more attention from the various trade associations than it has in the 


Third. A corporation known as the “Trade Protective Association ’ has been 
formed by, leading marine insurance offices in this country with a paid-in capital 
of $ 50,000 to prevent theft and pilferage, to secure and distribute among the 
stockholders information, and to perform services in the way of detective work 
in following up cases of importance. This association, however, in my opinion, 
can accomplish little without the hearty cooperation of all importers and ex¬ 
porters their trade associations and the carriers. The best way to secure the 
cooperation of the carriers is to force them (quite properly) to have a financial 
interest in the safe custody and delivery of the goods entrusted to their cnre. 


72 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Insured bills of lading: 1 hav,e been told that two legal forms of bills of lad¬ 
ing have been suggested—one under which the carriers will assume all the risks 
of transportation and navigation and the other under which it will assume none. 
Differential rates will be charged and presumably the carriers would secure full 
insurance from the underwriters when the “ full value ” bill of lading was 
issued. This may at first sight appear to be desirable, but I can not see where 
it would change the present situation in the least unless to make it worse. The 
carriers would in this way be relieved of even the small responsibility they now 
assume and would therefore have less incentive than ever to properly protect 
the goods. As a result, marine insurance rates would have to be increased still 
further, thereby placing a further handicap on American foreign trade. 

Each carrier would naturally assume responsibility for safe delivery only for 
the time the goods were in its custody, and the insured bill of lading feature 
would therefore not fully protect the shipper as marine insurance does at 
present. There are frequently several carriers involved in the course of a ship¬ 
ment— 

The truckman at some interior point to or from the railroad. 

The railroad to or from the seaport. 

The truckman between the railroad warehouse and steamship dock. 

The steamship. 

The lighter. 

The customhouse. 

The rail or water carrier (river or canal). 

The truckman again. 

I fail to see how it would be feasible for any carrier to issue an insured bill 
of lading which would cover all of these factors. 

If I am correct in this, the assured would be forced to place insurance as 
usual with the companies, subject to the “ full valued ” bill of lading, at an ad¬ 
ditional cost. Of course, the additional cost would be less than the rates of 
premium charged by underwriters with the present form of bill of lading. 

Mr. Edmonds. I would like to ask a question from your practical 
experience. Take the case of English ships and American ships sail¬ 
ing from New York Harbor to the west coast of South America, for 
example; both of them want insurance against theft and pilfering, 
disturbance of cargo, and so on; would they be charged an equal rate ? 

Mr. Osborn. They would at the present time. 

Mr. Edmonds. By the New York companies? 

Mr. Osborn. Yes. 

Mr. Edmonds. But would the English company give the English* 
ship a better rate across the ocean, or are your rates equal ? 

Mr. Osborn. I could not answer that. I do not know. 

Mr. Edmonds. From your statement it would seem that the English 
have been able to curb the trouble much more than the Americans. 

Mr. Osborn. Well, I was speaking of shipments from England to 
the west coast of South America, say. 

Mr. Edmonds. Well, would a shipment from England to the west 
coast of South America get a better rate than a shipment from New 
York to the west coast of South America? 

Mr. Osborn. I believe it would, in England. 

Mr. Edmonds. It would get a better rate ? 

Mr. Osborn. I think it would. 

Mr. Edmonds. Then of course that is an advantage to English ship¬ 
pers. 

Mr. Osborn. Exactly. 

Mr. Edmonds. That would indicate that there was less pilferage 
on English ships than on American ships. 

Mr. Osborn. I believe there is less pilfering on English ships from 
English ports than on any ships from the United States. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


73 


Mr. Edmonds. 1 ou would think, then, that an English ship sailing 
from New A ork to the west coast of South America would prob¬ 
ably have an amount of pilfering equal to that on an American ship? 

Mr. Osborn. I can not say that I have ever noticed any difference. 
We have both; and we make the same rates. 

Mr. Lehdbach. Thank you very much, Mr. Osborn. We will now 
call Mr. McComb. 

STATEMENT OF ME. S. D. McCOMB, MANAGER OF THE MARINE 
OFFICE OF AMERICA. 

Mr. McComb. I am manager of the Marine Office of America; 
that is, the marine department of the American Insurance Co. of 
Newark, comprising the following companies: American, Eagle, 
Continental, Fidelity, Phoenix, the Firemen’s Insurance Co. of 
Newark, and the Glens Falls Co. of Glens Falls. 

I would like briefly to outline what we think is the cause of this 
large increase in theft, pilfering, and short delivery, and also the 
breakage and leakage, and the effect it has had on commerce, and 
then what we would suggest as a remedy. 

I can say in starting that I agree with Mr. Rush and Mr. Winter 
and Mr. Osborn. 

The war, in a large way, we think, is responsible for present condi¬ 
tions. During 1915 and 1916 there was considerable confusion in 
shipping, and with the large increase in the number of vessels there 
was an increase in inexperienced masters and crews, and also inex¬ 
perienced stevedores in loading and unloading vessels. There was 
a great congestion in all the railroad yards and on the docks, and 
in many cases goods had to be stored out in the open streets, and the 
regular customary methods of transportation were entirely thrown 
out of kilter. This naturally resulted in an increase in the per¬ 
centage of goods in foreign trade that did not reach their ultimate 
destination in good, sound, condition; but the increase in this loss 
was not occasioned by strictly marine perils. The largest losses, of 
course, were actual war losses—sinking by submarines—but there 
were also losses from exposure, due to goods on the street being 
rained and snowed on, and losses caused by damage from other 
cargoes, as in the case of soda being stowed next to some barrels of 
oil which leaked. 

There was also a great deal of breakage, which undoubtedly was 
occasioned by improper stowage. Then in addition there were the 
delays in arrivals. 

A strictly marine insurance policy does not cover losses of this 
kind, as they are not perils of the sea. They can be more properly 
classed as perils of transportation, and formerly, before the war, 
carriers to a greater or lesser extent settled those claims, and the 
marine insurance companies paid the .strictly marine losses caused by 
fire, sinking, stranding, collision, and heavy weather. But during 
the war the shipowners began to evade their liability. There were 
a great many ship operators that had no particular financial strength, 
and they were inclined to evade losses, and there were new bills of 
lading adopted rather designed to let the carrier out of his liability. 

Then also cables were not working readily and means of communi¬ 
cation were broken down. It was difficult at that time to get proper 


74 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


reports back and forth, and it became difficult to pin the liability on 
to the carrier. So that the owners of goods sought relief, and that 
resulted in pressure being brought on the insurance companies to 
assume these additional hazards, and to-day in the warehouse-to- 
warehouse policy it is really a transportation policy more than it is a 
policy of marine insurance. So on this so-called war-risk policy 
from warehouse to warehouse, no matter what happens to the goods 
or in what condition they arrive, or if they do not arrive at all, the 
insurance company makes good the loss. 

The yielding of the insurance companies to this pressure, as Mr. 
Winter said this morning, has resulted in making matters worse, 
because the shipowners are aware that this cover is being granted 
now, and they are resisting more strongly than ever any attempts 
to place the liability on them, and they are now putting in their bills 
of lading that insurance claims paid to a shipper releases them. The 
result of this is that shipowners are not exercising the care of the 
property in their custody that they formerly did, and we think that it 
should be the first principle in transportation laws, whether by land 
or sea, that the persons having goods in their custody should be held 
financially responsible for them. 

In justice to the ship operators I would say that they are not solely 
responsible for this condition; that shippers and consignees have 
both contributed to some extent. The more experienced exporters, 
those who were in business before the war, that had a trained staff 
and realized the hazards to which their goods would be subjected—- 
those men have to a great extent kept up the same kind of exactions, 
but during the war a great many new importers got in and they did 
not realize how severely a case of goods is handled sometimes", and 
their cases were not constructed as they should have been, and these 
cases, sometimes before they arrive at the steamer at all, are broken. 
You can go down along the dock and see cases with the whole ends 
knocked off. and that is simply an invitation to pilfer, because the 
goods are right there, open, and anybody going by can help himself. 
That undoubtedly has added to the pilfering. 

In addition, I think investigation has shoAvn that there are some 
shippers who are absolutely dishonest. They have secured a' policy 
covering theft and pilfering and short delivery, and pack in cases 
which are supposed to contain a dozen articles only 9 or 10 articles, 
and some of the investigations point to a certainty that that is the 
condition in which they left the original packer. Of course, that 
class of people have to be dealt with differently. The faults of the 
honest shipper can be corrected by a campaign of education, I think, 
through the export associations and chambers of commerce showing 
the men how they ought to send their goods and how they ought to 
pack them. 

The same thing applies to consignees. While some consignees un¬ 
doubtedly get packages that do not contain all they are supposed to, 
and there have been cases of pilfering, some cases certainly indicate 
that the buyers state that they receive less than they actually do. I 
think that is especially true down in South America. There is one 
contributing cause that has added, a good deal to that, I think, and 
that has been the great shrinkage in prices. People in South America, 
say, bought goods a year ago at twice what they are worth to-day; 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 75 

when they get the goods down there they do everything they possibly 
can to evade taking them. They know that if they take them they 
will have to pay twice what they can go out and buy them for now. 
There have been meetings of chambers of commerce and export asso¬ 
ciations to handle that South American situation. I think there is 
something like $50,000,000 worth of American goods on the piers 
and docks and warehouses down there which the South American 
consignees are trying not to take. But in the total of these theft and 
pilferage losses—and some of them can be put right on the shippers 
themselves who do not put them in the boxes, then on the trucks 
who take them from the warehouse to the railroad or the pier—the 
trucking thefts have been very heavy. Then there have been thefts 
on the railroads, thefts on the piers by the stevedores; thefts on 
board the steamer, and from the steamer to the consignee, and finally 
thefts right in the consignee’s own plant. 

The total result of all these thefts combined has resulted in a tre¬ 
mendous economic loss. It is practically impossible to tell in dollars 
how much they amount to, but from confidential figures collected 
from a number of American companies the loss from theft, pilferage, 
and short delivery to-day is running at half a million dollars a 
month. 

In addition to this there is the American business that is placed 
abroad and then the thefts that the other countries are experiencing, 
which are about the same as in this country. So there is not any 
doubt that the ultimate wastage to-day is running into the millions 
every month. 

To give you an idea of this, which will be probably more accurate 
than you can get it from general statements, I have here a list of 
approximate rates for theft and pilferage on the best class of com¬ 
modities from the United States to foreign countries, and what it 
was in 1914 and in 1919 and 1921—the present rates. I will leave 
this with the committee. It shows in 1914 that the rates were nominal 
to all European points; probably one-fourth of 1 per cent to Mexico 
and South America, and nominal in the Far East. 

In 1918 and 1919 they ran from one-eighth to the United Kingdom 
to a quarter and three-eighths to the rest of Europe, and a quarter 
for the Far East. 

Then the rates to Mexico and South America were jumped up from 
1 to 2 or 3 per cent. 

To-day the rates are three-eighths of 1 per cent to the United King¬ 
dom : 1 to 14 per cent to France and Spain; 4 and 5 per cent to Portu¬ 
gal ; 3 to 5 per cent to Italy; 5 and 10 per cent to Mexico, and as high 
as 10 per cent to South America, where it is obtainable at all. 

So that the rates have jumped up 300 or 400 or 500 per cent; and 
before, at the low rates, it was taken willingly, and now it is only 
taken more or less under pressure and under exceptional circum¬ 
stances and only, on high-class commodities, on those not susceptible 
to theft and pilferage. 

As has been already stated, the articles most susceptible to theft 
and pilferage seem to be clothing and wearing apparel of all kinds, 
and material for making wearing apparel, firearms, cutlery, and 
hardware. 


76 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

I will submit this statement of rates, with your approval. 

Mr. Edmonds. It may be inserted at this point. 

(The paper referred to follows:) 

Approximate average rates on best class commodities for theft and pilferage. 


From the United States to— 


1914 


1918-19 


1921 


•I. 


United Kingdom. 

France. 

Belgium and Holland. 

Spain. 

Portugal. 

Italy. 

Scandinavia.„. 

Mexico. 

Cuba. 

Haiti and San Domingo. 

Central America. 

West Indies. 

Brazil. 


Nominal. 

.do... 

.do... 

.do... 

.do... 

.do... 

.do... 

\ per cent 
5 cents... 

.do... 

.do... 

.do... 

.do... 


j * percent... 
. £ per cent... 

j.do. 

.j | per cent... 

..do. 

. i per cent... 

.do. 

. 1-2 per cent. 
. I per cent... 
. | per cent... 

..do. 

. i per cent... 
j J percent... 


River Platte. 

West Coast of South America. 




do 


_do. 

1-3 per cent 


China. 

Japan. 

India and Straits Settlements. 
Philippines. 


Nominal 

.do.. 

.do.. 

.do.. 



-J per cent 

.do... 

.do... 

.do... 


| per cent. 

1- l§ per cent. 

} per cent. 

1£ per cent. * 

4- 5 per cent. 

3-5 per cent. 

1 per cent. 

5- 10 per cent. 

2J-5 per cent. 

2 per cent. 

Do. 

f per cent. 

3-5 per cent to ports, 4-7 
per cent to interior. 

2- 3J per cent. 

2-5 per cent to ports, 8-10 
per cent to interior. 

1 per cent. 

Do. 

Do. 

1£ per cent. 


These rates apply to commodities most susceptible to pilferage—clothing, 
wearing apparel, and material for making same. 

The same thing applies to leakage rates. Before the war they 
were not very high—one-half of 1 per cent, say—and now rates run 
from 2 to 4 per cent to European ports, if it is obtainable at all. 
But even with the increase of rates the tendency is to cut out the 
business. The result is a burden imposed on our commerce. In 
some cases it has gotten to be more than the traffic will bear. And 
conditions are not improving, because the most available figures in¬ 
dicate that they are getting worse, and if foreign trade in this 
country is to increase, this situation has got to be corrected. 

I would like at this point to explain the position of our companies 
toward this whole matter, and I think it is the position which most 
of the insurance companies take. We are not making these sugges¬ 
tions from any selfish motive, but for the good of the whole coun¬ 
try and the people. We desire to see American foreign trade pros¬ 
per and the American merchant marine become firmly established 
and expand. From this prosperity we expect to benefit, and prop¬ 
erly so. The problem, however, we consider a national one, affect¬ 
ing the prosperity of all of us, and we think it should be only con¬ 
sidered from that standpoint. We believe that insurance should not 
be considered at all in trying to solve this problem; that it should 
be considered entirely from the economic standpoint. 

We feel that we should try to determine the soundest way to de- 
veloo our foreign trade, and the way which is considered will 
result in the largest proportion of our goods arriving at ultimate 
destination in sound condition; and then how this can be accom¬ 
plished at the least expense and have goods delivered in the shortest 
time. 

I say that the insurance companies should not be considered in 
determining this plan, because insurance can be arranged after all 



































































THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


77 


this is settled. Insurance can be fixed to cover any particular sell¬ 
ing conditions. The shipper, the carrier, and the consignee can all 
cover their respective liabilities. The insurance premiums in the 
long run will have to be sufficient to cover the losses, and regardless 
of who actually pays these premiums they must be borne in full, 
in the long run, by the consignee. So that the plan which involves 
the least loss, regardless of who may be held liable for it, is the 
plan which will be the cheapest for the ultimate consumer. Insur¬ 
ance simply distributes the loss. By means of it the total loss or 
the value of the amount lost of the given commodity is spread some¬ 
what evenly over the consumers; so that, instead of falling entirely 
on the owners of the particular part that is lost, it is a very light 
burden on all of them, instead of a heavy burden on a few of them. 

As an example, say that statistics showed that one-third of 1 per 
cent of all of a given commodity exported from this country was 
totally lost—this is an imaginary case, but say that statistics showed 
that one-third of 1 per cent of any commodity was lost, and the 
insurance companies charge one-half of 1 per cent premium. That 
one-half of 1 per cent would be distributed on the cost to all the 
consumers of it, which would be a very small increase in the cost, 
and yet by having the insurance it would be a life-saver for the 
few people who owned the particular cargo of goods that was lost. 

We would recommend closer cooperation between all interests in¬ 
volved—that is, the shipper, the carrier, the consignee, and the un¬ 
derwriter—with their respective relations maintained by better forms 
of contract than at present, accompanied by such legislation as was 
necessary to preserve the status that was decided to be best. 

Shippers can cooperate by having their goods packed better, con¬ 
sidering the particular trip that each case must take, and having 
it so packed that it can be handled in due course throughout the 
entire trip, standing the wear and tear to be encountered; by having 
it properly marked and labeled with marks and labels that will be 
there when the trip is over, and also by having the cases so secured 
that they can not be opened or tampered with en route without show¬ 
ing signs of the tampering. 

We are not discussing the dishonest people; we are assuming that 
these recommendations are for the honest shippers and carriers. 

The carriers, we feel, can cooperate by issuing a better form of 
bill of lading, which I will take up later in detail, and by taking 
better care of the property intrusted to their care. At present some 
carriers do not seem to take care of the goods in their custody. TV e 
have been advised that some companies are reducing expenses by 
discharging watchmen and other employees incidental to taking 
care of the goods in their charge. If there is no responsibility on 
their part, why spend money looking after the goods? 

Many watchmen employed now are largely old men, and some of 
them cripples, and you can not expect an old man, 70 years old, pos¬ 
sibly with a wooden leg} to stand on a pier and try to stop two or 
three husky longshoremen from walking away with goods. There 
was one of them that tried it and he was taken to the hospital and 
stayed there for two or three weeks and said he would never try it 
again The steamship companies have got to employ men on their 
docks with nightsticks, or whatever is necessary to handle these 
roughnecks. 


78 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


There is no doubt that the carriers can stop the losses if they want 
to, and are wfilling to spend the money. I think that the Bull Steam¬ 
ship Co. is a case in point. On a certain form of bill of lading the 
Bull Steamship Co. has been carrying goods very successfully down 
to Porto Rico with, I believe, almost minimum loss. 

The consignees also can cooperate in this thing by taking their 
deliveries promptly and by making an immediate examination of 
their goods and reporting on the condition in wdiich they find them 
on arrival. Some of the worst abuses are the delay on the part of 
the consignees after they receive their goods, and I do not think it 
is considered unusual for some claims not to be reported for a year. 

The underwriters can cooperate in this by providing a policy to 
suit the conditions that are agreed on, and arranging to have com¬ 
petent representatives abroad acting with the consignees. 

The underwriters recently amalgamated the New York Board and 
the National Board of Marine Underwriters, and this undoubtedly 
will have a beneficial result and will result in American companies 
giving better service to consignees abroad. 

It has been argued that putting responsibility on the shipowner 
will handicap the ship operator; that it will be another burden on 
their backs when they are scarcely able to get along with the burdens 
on them now. I do not think that this is true at all, and I think it 
can be demonstrated not to be true. Most of our exports now are 
sold on c. i. f. terms—which means cost, insurance, and freight. The 
exporter knows what his goods cost him and what he sells them for 
at his factory. That is the cost, and he finds out what the insurance 
will cost and what the freight will cost, and those are added together, 
and that is what the consignee pays. The exporter is only interested 
in the total of this sum, and if you can reduce c. i. f., he does not care 
how much is “ i.” and how much is “ f.” if the total is reduced. 

As an example, say a merchant is sending $10,000 worth of piece 
goods to Valparaiso. The insurance to-day, theft, pilferage, and 
marine, would cost him at least $600; freight, sa}% $200, making a 
total of $800 to add to his $10,000. Now, if full carrier’s liability 
were imposed on the shipowner he would have to charge more, first, 
for additional people to care for the goods, and, second, for insurance. 
The better care he took the less his insurance would be, as lie would 
be charged according to his results. But say the shipowner would 
have to double his freight charges. If that were true, that would 
make $400, or, say, $500 even, and the exporter’s insurance under con¬ 
ditions of that kind would be reduced to $150 or $200. So that the 
“ i. f.” part of the c. i. f. would be reduced to $600 or $700 from the 
present $800. 

The American exporter would be able to get his goods to a foreign 
market cheaper, because a smaller portion of them would be lost on 
the way. This would lower the price, because the cost of all the goods 
shipped has to be charged against the percentage that arrive there 
sound. 

The ultimate consignee pays the c. i. f. and is interested in getting 
the lowest total of these three factors, and anything that can be taken 
off the insurance can be added to the freight, and an example of the 
great increase in insurance companies, and the cost, in the last few 
years, shows that there is plenty of margin for a shipowner to in- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 79 

crease his charges and still have the total expense of getting goods 
there less. te 

Now, I might refer here to the insured bills of lading. Some steam¬ 
ship companies to-day issue bills of lading that are insured, but 
it is not practical in the general run of business, because it only covers 
goods on a portion of their journey instead of the entire journey. 
I think possibly a similar case would be a man in Chicago who wanted 
to send a registered letter to a man in Paris, and the post-office au¬ 
thorities would say to him, after this letter is put on the steamer at 
New York, “We will register this letter until it is taken off the 
steamer at Havre. Between Chicago and New \ ork, and between 
Havre and Paris, you have got to make other arrangements.” The 
bills of lading at the present time, insured bills of lading, only cover 
while the bill of lading is in force, and practically while the goods 
are in the hands of the ocean carrier. 

I his problem of shortages and breakages is not only being con¬ 
sidered here in the United States to-day but it is being considered 
by the British Empire. The report was handed in, was it not, the 
report of the British Shipping Commission ? 

Mr. Edmonds. Yes. 

Mr. McComb. It provides for uniform legislation throughout the 
whole British Empire. Australia and Canada now have acts similar 
to our Harter Act, and that commission’s report recommends similar 
legislation for the whole British Empire. 

Japan now has a law imposing liabilities on the carriers, and I be¬ 
lieve one has been introduced in France, and one is being agitated 
now in Scandinavia. So it looks as if the whole world is interested 
in this problem. They all seem to feel that the country which satis¬ 
factorily solves this problem first will get a lead over its competi¬ 
tors in world trade. And this thing is solely a foreign-trade matter, 
an international matter, and I believe ultimately it will have to be 
settled in some form of international bill of lading agreed on, some¬ 
what along the lines of the load line we were talking about last week. 

Each country seems to be afraid that one of its competitors will 
get some advantage over it, or that it will be placed at a disadvantage 
to one of the other competing nations. I think this idea was brought 
out by the Shipping Board at those load-line meetings. No country 
wants any other country to get an edge on them, and the only way 
that any country will feel that they are each on an equitable and 
fair plane will be through an international agreement, and I do not 
think we will have international harmony until there is some kind of 
reciprocal arrangement. 

Mr. Free. May I ask you a question right there? If this should 
be adopted in this country now, would it put our shippers at a dis¬ 
advantage as compared with foreign shippers? 

Mr. McComb. No, sir. 

Mr. Free. It wrnuld if it were only made effective here, would it 
not ? 

Mr. McComb. No; because if it were put in force here, it applies 
to all foreign ships coming to our ports, as well as American ships. 

It might be advisable to try to perfect an arrangement along the 
lines of, say, an international Carmack amendment, under which a 
common carrier could give what would be really a transportation 


80 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


receipt for goods from their points of origin to the points of ulti¬ 
mate destination, and under an agreement made at the same time or 
subsequent to it which would carry the goods under the terms of 
the original transportation receipt. 

There is an international postal agreement in force now for the 
transportation of mail, and we have the Interstate Commerce Com¬ 
mission, and under the Carmack amendment here the initial carrier 
completes all the arrangements with the shipper for transportation, 
even when the goods have to go over seven or eight different rail¬ 
ways. Possibly something of that kind could be worked up in an 
international agreement. 

I mentioned before, the marine insurance companies to-day are not 
issuing really a marine insurance policy; they are issuing a trans¬ 
portation policy that covers goods on shore in the hands of truckmen, 
railroads, river steamers, ocean steamers—through policies; and I 
think that the common carriers could get together to issue a trans¬ 
portation receipt to cover the entire journey from warehouse to 
warehouse. This is in the future. 'It will have to be worked up to 
that, but I think it is good to consider what we might ultimately 
work up to. 

Now, along the lines already spoken of by Mr. Rush we have sug¬ 
gested an amendment to the Harter Act which I would like to place 
on file. 

Mr. Edmonds. That may be included in the hearing. 

(The paper referred to follows:) 

AN ACT Relating to bills of lading and certain obligations, duties, and rights in connection 

with transportation of goods by water. 

Be it enacted by the Senate and House of Representatives of the United States 
of America in Conyress assembled, That any carrier accepting any goods for 
transportation to, from, or between ports of the United States and foreign ports 
shall he liable for the full actual value thereof to the lawful holder of any bill 
of lading issued therefor, or to any party entitled to recover thereon, for loss, 
damage, or injury to said goods while in the custody of said carrier or any other 
carrier to which said goods shall have been delivered in the course of said ship¬ 
ment. arising from robbery, theft, or pilferage, by whomsoever committed ; negli¬ 
gence; fault or failure in proper loading, stowage, custody, care, or improper 
delivery to the consignee named in said bill of lading of any and all lawful goods 
so accpted for transportation as aforesaid: Provided, however , if the vessel 
transporting said goods shall be in all respects seaworthy and properly manned, 
equipped, and supplied for the intended voyage, the carrier shall not be held 
responsible for damage or loss resulting from faults or errors in navigation nor 
liable for losses arising from perils of the sea or other navigable waters, acts 
of God or public enemies, or the inherent defect, quality, or vice of the thing 
carried, or from insufficiency of package, or seizure under legal process, or for 
loss resulting from any act or omission of the shipper or from saving or attempt¬ 
ing to save life or property at sea, or from any deviation in rendering such 
service. 

Sec. 2 . That in any action aga'nst the carrier to recover the value of said goods 
due to loss, damage, or injury thereto, the burden of establishing that the loss, 
damage, or injury to said goods was occasioned by a cause for which under the 
provisions of this act the carrier is not liable shall be upon the carrier. 

Sec. 3 . That it shall he the duty of any shipper delivering any goods to any 
carrier to properly pack the same for shipment and to truthfully describe or 
make known to said carrier the true nature and character of the goods included 
in said shipment and the full actual value thereof as disclosed in the customs 
or consular invoices accompanying the same. 

Sec. 4. The acceptance by any carrier of goods for shipment and the delivery 
of a bill of lad ng therefor shall be prima facie evidence that the goods included 
in said shipment were properly packed for shipment, and in any action against 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


81 


the carrier to recover the value thereof due to loss, damage, or injury thereto the 
burden of showing that such loss, damage, or injury was due to insufficiency of 
package or improper packing shall be upon the carrier. 

Sec. 5. That is shall not he lawful for any carrier to insert in any bill of 
lading any clause, convenant, or agreement whereby the carrier shail be re¬ 
lieved or exempted from any liability imposed upon it by any of the provisions 
of this act, or whereby the liability of the carrier for any loss, damage, or in¬ 
jury to such goods, or any specific portion thereof, shall be limited to less than 
the full actual value thereof as disclosed in customs or consular invoices ac¬ 
companying the same, or any clause, covenant, or agreement providing that the 
carrier shall have the benefit of any insurance effected by the shipper upon 
the goods, or that the carrier shall not be liable for any damages capable of be¬ 
ing covered by insurance, or any clause, covenant, or agreement providing a 
shorter period for giving notice of claims for loss, damage, or injury to said 
goods than 90 days, and for the filing of claims for a shorter period than four 
months, and for the institution of suits than two years; or any clause, covenant, 
or agreement whereby the obligation of the carrier to properly equio, man, 
provision, and outfit any vessel transporting said goods, and to make said 
vessel seaworthy and capable of performing her intended voyage, or whereby 
the obligations of the carrier to carefully handle and stow said goods and to 
care for and properly deliver the same, shall in any wise be lessened, weakened, 
or avoided. Any and all words or clauses of such import inserted in bills of 
lading shall be null, void, and of no effect. 

Sec. (5. That it shall be the duty of every carrier to issue to the shipper of 
any lawful goods a bill of lading stating among other things the marks neces¬ 
sary for identification, number of packages, or quantity, stating whether it be 
carriers’ or shippers’ weight, and the true actual value of said goods as dis¬ 
closed in the custom or consular invoices relating thereto, the apparent order 
or condition of such goods, and that said bill of lading is issued pursuant to 
the provisions of this act. Such bill of lading shall he prima facie evidence of 
the receipt of the goods therein described. 

Sec. 7. That any person or persons who shall willfully violate any of the 
provisions of this act. or the carrier guilty of such violation and who refuses on 
demand the bill of lading provided for herein, or issues any bill of lading con¬ 
taining any clause, covenant, or agreement declared by this act to he unlawful, 
shall be guilty of a misdemeanor, and shall pay a fine of not less than $1,000 
and not exceeding $2,000. The amount of the fine and costs for such violation 
shall be a lien upon the vessel of any carrier guilty of such violation and such 
vessel may he libeled therefor in any district court of the United States within 
whose jurisdiction the vessel may be found. One-half of such penalty shall go 
to the party injured by such violation, and the remainder to the Government of 
the United States. 

Sec. 8. That in this act, unless the context of subject matter otherwise re¬ 
quires, carrier means any ship or vessel, owner, charterer, agent, manager, 
master thereof, accepting any goods for transportation by water. 

Shipper means any person, partnership, association, or corporation, entering 
into any agreement with any carrier covering the transportation of goods by 
water. 

Goods means merchandise, chattels, or property of any description in the 
course of transportation by water or which have been or are about to be 
transported by water. 

Bill of lading means any shipping receipt or document issued covering the 
transportation of goods by water. 

Sec. 9. Sections 8029 to 8035, inclusive, of the Revised Statutes of the United 
States and any or all other provisions of the statutes of the United States in¬ 
consistent with the provisions of this act are hereby repealed. 

Mr. McComb. I would like to mention, just by way of suggestion, 
that it might be advisable to grant authority to the Secretary of Com¬ 
merce to remit some of the requirements in that law in the case of 
experimental cases; that is, new types of boats, or a new type of 
goods, or a new trade route, or something where the thing was an 
experiment and the Secretary of Commerce thought that with the 
full rigors of the law, possibly they could not be developed, but now 
it might be advisable to consider such a plan. 

60083—21-6 


82 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


We would also like to suggest that, so far, the Harter Act applies 
only to shipowners’ liability, and we would like to suggest that con¬ 
sideration be given to fixing the liability of everyone handling goods 
in connection with import and export shipments, so that what I have 
referred to as a transportation receipt could be given and could cover 
from the time the goods left the warehouse until they arrived at the 
warehouse; to include not only shipowners but truckmen, lightermen, 
warehousemen, railroads, and any person having any custody of the 
goods during the trip. It might be possible to license such persons, to 
grant permits, to handle goods in import and export trade, and pos¬ 
sibly bond them. Too many people with no financial responsibility 
are handling very valuable goods to-day. Truckmen with a net 
worth of less than $5,000' are allowed to go off with a load of goods 
worth $100,000. 

More than one truck a week is reported absolutely missing in New 
York. That is in addition to all the petty thefts and pilferings that 
are going on. They steal a whole truck, and in Congressman Lehl- 
bach’s State these trucks between Philadelphia and New York are 
missing all the time, and similar trucks, full of silk, run up to 
$100,000 in value. 

The liability of every person in connection with a shipment all the 
way through, I think, should be fixed, and only persons with finan¬ 
cial responsibility should be permitted to participate in the whole 
movement. Of course, ultimately it will not be necessary to have 
such an arrangement in this country, but it would have to be world 
wide in order to be entirely successful, and that, of course, would 
necessitate an international agreement. But I think this could ulti¬ 
mately be done. 

When you follow a shipment through from warehouse to ware¬ 
house, it is trucked from the factory to the railroad, from the railroad 
to the seaboard; it is trucked into a warehouse there, trucked out 
again, lightered, put on a steamer, goes across, and may be landed on 
a dock or lightered over there; then it is trucked to a warehouse, fre¬ 
quently put on a river steamer and trucked to the warehouse again. 
In its whole trip it is handled by a great many persons. 

Another suggestion that might be possible for the congressional 
committee to consider is an advisory committee, consisting of men 
expert in importing and exporting, and ship operators, and all the 
interests involved, to make an investigation and report to the con¬ 
gressional committee here on the feasibility of putting such a plan 
in operation and the possibility of reciprocal arrangements with the 
leading foreign countries. 

Now, I would just like to say something on bills of lading and 
then I will be through. To conform to the suggestions for ship¬ 
owners’ liability we have recommended—we would recommend—that 
bills of lading provide for the following: 

1. That carriers be held fully liable for all losses to goods while 
in their charge, except losses caused by perils of the sea or other 
navigable waters, acts of God, or public enemies, or from inherent 
defects of quality or vice of the goods carried, or from insufficiency 
of package, or seizure under legal process. 

That is the same as the Harter Act. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


83 


2. That the carriers be prevented from limiting their financial 
responsibility, because of such liability, to less than the invoice value 
of the goods. 

3. That the carriers be compelled to make proper delivery; that 
a proper receipt from the consignee be prima facie evidence of such 
delivery, and that liability under bill of lading exists from the time 
the carrier receipts for the goods until the carrier gets consignee’s 
receipts for them, or within a reasonable time after offering the 
goods to the consignee, in the event they decline to accept them. 

4. Arrival of goods in damaged condition, or nondelivery from 
any cause shall constitute a claim against the carrier, and the burden 
of proof to show he is not liable shall be upon the carrier. 

5. That shippers must make a truthful statement of their ship¬ 
ments, describing the kind, amount, weight, and value of the same; 
the particulars in the bill of lading to agree with the consular in¬ 
voice. 

6. That consignee be given reasonable time for filing claims and 
commencement of suit. 

We would like to see added to this that the original carrier be held 
liable right through and each carrier protect itself by a series of 
receipts which they could obtain from the succeeding carrier until 
the consignee was reached, but this probably can not be done at the 
present time. 

Most bills of lading now contain clauses which we think are ille¬ 
gal. and I would like to submit two bills of lading that I have here 
with the clauses which I have indicated. 

Mr. Edmonds. You mean they are illegal in view of the Supreme 
Court’s decision on the Harter Act? 

Mr. McComb. Even without the Supreme Court’s decision I think 
they are illegal. The Harter Act in section 2 requires that the carrier 
carefully handle the cargo, and carefully and properly deliver same. 
Now, this bill of lading says: 

The carrier shall in no event he or be held liable for loss of, or damage to, 
any merchandise after it is unbooked from vessel’s tackle at port of discharge. 

Then it goes on and says that they can throw it overboard if they 
want to. It goes on: 

Carrier, at its option, shall have all rights and benefits granted to ship¬ 
owners limiting, or permitting a limitation of their liability by the laws and/or 
customs of any other State and/or country into a port of which said vessel may 
enter, or at which she may touch. 

Now, this contract is made in the United States and should be car¬ 
ried out under the laws of the United States, and I do not think a 
steamship company under the law has a right to put that in their 
bill of lading. They add : 

Carriers shall not be, or be held, liable for, any loss of, or damage to, any of 
said merchandise resulting from any of the following causes, to wit: Acts of God, 
perils of the sea or other waters, war, enemies, privateers, letters of marque 
and reprisal, pirates, thieves, robbers, arrests or restraint of princes or rulers 
or people, acts or takings or claims or restraint of Government or municipal or 
de facto officers, whether acting with or without lawful authority, legal process, 
attachments, quarantine and sanitary measures, barratry of master or crew, 
rising of passengers, 

And so forth. 


84 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Now, tlie crew are the employees of the shipowner, and I do not 
think the shipowner has any legal right to contract himself out of 
the actions of the crew. Then it says: 

Carriers, owners, charterers, or agents shall not become or be held responsible 
for any loss or damage that shall result from fault or error in management, of 
vessel, or its engines, boilers, winches, hoisting gear, fittings, fixtures, equip¬ 
ment, ports, hatches, dead light, before or after sailing, or be in port or at sea 
or from any other causes of what kind soever. 

The Harter Act requires that he properly handle and stow the 
cargo. Now he is getting exemption here for his steam winches and 
his loading gear. That is a violation of law, I think. Then the bill 
of lading also contains the following: 

Any omission to exercise such due diligence shall not be presumed; but the 
same must, if claimed or alleged, be proved by the shipper. 

Now, a man here ships some goods to England and they are turned 
out of the steamer damaged; under this he has to prove his case 
against the shipowner. Now, actually the shipowners—the men on 
the ship—are the only ones who know how that damage happened or 
could have happened, and they can explain and would have to prove 
they are not liable. The shipper can not prove he is liable. 

Still another section of the bill of lading provides: 

Neither fault nor failure nor improper loading nor had stowage, nor improper 
custody, nor want of due care, nor improper delivery of merchandise by carrier 
shall be presumed, but same must, if alleged, be proved.by shipper or consignee. 

That furnishes another illustration of the same thing. That is, I 
think, contrary to the Harter Act. 

It is further stipulated and agreed that vessels are warranted seaworthy only 
so far as due care in the appointment or selection of agents, superintendents, 
pilots, masters, officers, engineers, and crew have secured or may secure it. 

Now, the Harter Act says distinctly that the shipowner must pro¬ 
vide a seaworthy boat, and in the case of the Carib Prince the Su¬ 
preme Court of the United States maintained that they must have a 
seaworthy boat. Here he says he only agrees to make it seaworthy 
in so far as hiring proper master and crew makes it seaworthy—pass¬ 
ing the buck. 

Then another clause provides: 

Carriers shall never be liable for any loss of, or damage to. said merchandise, 
nor for any damage or loss suffered in connection therewith, unless its neglect 
or willful default is shown to have been the sole cause of the same. 

I think that is illegal. 

If carrier becomes liable for any damage or loss to said merchandise, it shall 
have the benefit of all insurance on said merchandise, and of any payments made 
by or on behalf of the insurer thereof, whether under the guise of advances, 
loans, or otherwise; and shall also have the benefit of all loans, the amount of 
which have been determined by the total amount or part of any loss or damage 
to said merchandise, made the owner by the insurer thereof, and induced by the 
existence of the insurance upon said merchandise, and which are made repay¬ 
able only in the event recovery of said loss or damage is had from the carrier or 
said vessel. The right of any such insurance, advances, or loans may be offset 
in the amount thereof by carrier against the claim or suit for said loss or 
damage. 

Now, if that is not illegal, I think it is certainly against public 
policy. A shipper of goods takes out insurance, pays the premium on 
it; here is the shipowner, who does not pay a premium, and who tries 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 85 

to evade his liability by taking advantage of insurance that another 
man has paid for. I think it is dishonest, if it is not illegal. 

This bill of lading goes further and says: 

Carrier shall not be liable for any loss which can be insured against. 

Xow, if you only pay premium enough you can insure against any¬ 
thing, and he might just as well say the carrier is liable for nothing 
whatever. That is all this bill of lading is equivalent to. 

Then the carrier proceeds to limit itself to $100 in any event. 

Also, that if the ship is prevented by quarantine from reaching her destina¬ 
tion, or making due delivery of the goods, or is detained at quarantine, the goods 
may be forthwith, without previous notice to shipper, owner, or consignee, dis¬ 
charged into depots, lazarettes, hulks, crafts, or lighters at the risk and expense 
of shipper, owner, and consignee; all and any of them, and such discharge shall 
be deemed a full and final delivery of the goods, all risk, responsibility, and 
expenses of the carrier therefor, as carriers, bailee, or otherwise, ending as soon 
as the goods are delivered from the ship’s tackle, and all expenses thereby or 
thereafter incurred and all increased cost of such delivery shall be paid by 
shipper, owner, and consignee, all and any of them, the carrier retaining a lien 
on the goods therefor. 

The extra charge becomes a lien on the goods. Then the bill of 
lading also provides: 

It is expressly stipulated that if said merchandise need be lightered at any 
time or port or place all lighterage services rendered shall be and be deemed 
to have been rendered by an independent carrier or person; if such services 
be procured by carrier, they shall be deemed to be and to have been so pro¬ 
cured by it acting as agent therefor of shipper, and carrier’s liability as carrier 
at any port or place where such lighterage be needed shall end immediately 
vessel be anchored at or near the said port or place. Carrier’s liability after 
steamer be at anchor at or near to said port of delivery shall be that of ware¬ 
houseman only, and said merchandise after unhooked from ship’s tackles at 
such anchorage shall be at owner’s risk. 

And the Harter Act compels a shipowner to make proper delivery. 
I think that is illegal. 

And, finally, in accepting this bill of lading, the shipper, owner, and consignee 
of the goods and the holder of the bill of lading agree to be bound by all its 
stipulations, exceptions, and conditions, whether written or printed, as fully 
as if they were all signed by such shipper, owner, consignee, or holder. 

Mr. Leiilbach. Is there any liability left whatsoever to the ship¬ 
owner under such a bill of lading? 

Mr. McComb. That, I think, is the best one I found. Here is an¬ 
other bill of lading. They have got most of the preceding clauses, 
and they have got one or two in addition. I would like to point out 
a couple of them. This is the Cosmopolitan Line. This one starts 
with: 

It, is mutually agreed that the ship shall have liberty to sail with or without 
pilots, to carry goods on deck at risk of owners of the goods, to tow and assist 
vessels in need, and to deviate for the purpose of saving life or property; that 
the carrier shall have liberty to convey goods in lighters to and from the ship 
at the risk of the owners of the goods; and in case the ship shall put into a 
port of refuge or be prevented from any cause from proceeding in the ordinary 
course of her voyage to transship the goods to their destination by any other 
steamship; that the carrier shall not be liable for loss or damage occasioned 
by fire from any cause or wheresoever occurring; by barratry of the master or 
crew; by robbers and/or thieves on land or sea ; by arrest or restraint of princes, 
rulers, or people, riots, strikes, mutiny, combination, or crew; by explosion, 
bursting of boilers, breakage of shafts, or any latent defect in hull, machinery, 
or appurtenances. 


86 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


There the carrier exempts itself from its lighterage risk, which is 
part of making delivery, and also exempts itself from the acts of 
the crew, its own servants. It exempts itself from latent defects. 
There, I think, are three points in violation of the Harter A t. 

In another place the bill of lading says: 

Also that single packages exceeding 2 tons in weight shall he liable to pay- 
extra charges, if any, for loading, handling, transshipping, or discharging. 
Also that the steamer or any of the servants of the company shall not he liable 
for any damage or loss occurring from any accident in loading, handling, dis¬ 
charging, or transshipping of packages exceeding 2 tons in weight. And in 
case of any damage or loss resulting to the steamer, cargo, lighters, cranes, or 
hoisting tackle, owing to incorrect weight having been declared, the shippers 
and/or consignees of such cargo shall be responsible for such loss or damage. 
The stipulations for relief of carrier or vessel from liability for negligence 
shall be inoperative so far as unauthorized by the Harter Act. 

The carrier thought it was getting pretty close there itself. 

Another provision is: 

Also, that if any bag or baled goods are landed slack or torn the consignees 
shall accept such portions of the sweepings as shall be allotted by the steamer’s 
agent, and the same shall be deemed a full settlement of any claim for losses 
in weight. 

[Laughter.] 

Also, that glass is only accepted for carriage and shipped on condition that 
the carrier shall not be liable for breakage of same, however such breakage 
may be caused, even if by bad stowage, rough handling, or negligence on the 
part of any servant of the shipowner, before or after the commencement of the 
voyage. 

Mr. Lehlbach. Mr. McComb, will you put into the record the name 
of the company whose bill of lading you first read ? 

Mr. McComb. I am going to give you these two: The first one is the 
Dollar Line—the Robert Dollar Line—and the second is the Cos¬ 
mopolitan Line. 

Mr. Lehlbach. What one are you reading from ? 

Mr. McComb. The Cosmopolitan Line. 

Mr. Loines. Operating Shipping Board ships onty. [Laughter.] 

Mr. McComb. Well, they have got this $100 clause in here, and 
then they say: 

In no event shall the carrier be liable for more than invoice or declared value 
of goods, whichever shall be the least, not including prepaid freight. * * * 

Neither the carrier nor its property shall be held liable for the nondelivery of 
any goods not received on board the vessel at point of shipment regardless of 
any acknowledgment or receipt contained in this bill of lading. 

Now, under this they give you a receipt that they have got the 
goods, but unless you can positively prove that they put the goods 
on board the ship you have got no claim therefor. They simply 
say: “We never got the goods; we never loaded the goods on board 
the ship,” and in some cases they do not deny it, but they put a rubber 
stamp on, “ Not liable for any loss by theft or pilferage.” 

Mr. Campbell. You are not stating that as a law given you bv the 
consul? 

Mr. McComb. The consul had nothing to do with this. I am simply 
stating what these steamship companies do. I do not assume it is law. 

Mr. Campbell. You are advising the committee about what is 
illegal. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 87 

Mr. McComb. No; I am just giving this as my opinion. This is 
only a layman’s opinion, who knows very little about law. 

This bill of lading says [reading] : 

The steamer and owners shall not he held liable for any damage to the within 
cargo resulting from carriage or towage with, or proximity to, or the effect of 
other cargo, of whatever kind on board. * * * 

Also when goods are carried at through rates or consigned from or to places 
beyond the port of loading and/or the port of discharge, the responsibility of 
shipowner does not commence before actual shipment on board or continue be¬ 
yond discharge of vessel, shipowner’s responsibility being limited to the time 
goods are actually on board ship. 

Those are two bills of lading. Here is another one. This is not a 
bill of lading that is in use; it is the bill of lading that was suggested 
by the Chamber of Commerce of the United States to form the basis 
of a uniform international line of bills of lading, and that has in it 
some of the same defects. This is a big improvement over those 
others, but in this we feel that if the committee is going to suggest a 
form of bill of lading, and this is submitted to it, that we would like 
to make objections to paragraphs 1, 4, 5, 7, 8, 9, 14, and 15. I can 
write you on that in full later. 

Those two—the Robert Dollar and the Cosmopolitan bills of lad¬ 
ing—are bills of lading that are actually in force, and I thought it 
might be well to point out to the committee just what kind of con¬ 
tract they have got. 

Mr. Lehlbach. Does that complete your statement, Mr. McComb? 

Mr. McComb. Yes. 

Mr. Lehlbach. Are there any questions, gentlemen? 

Mr. Kirkpatrick. I want to ask one question. You said that the 
Bull Line was successfully coping with some of the difficulties that 
they met. What do they do ? 

Mr. McComb. As I understand it, they have a special form of bill 
of lading, assuming responsibility for which there is an additional 
charge made, and they have one end of their pier railed off with an 
iron rail, and two men, with night sticks there, and when those goods 
are brought in they carefully watch them taken off the truck and put 
on the pier, and count each one of them, and then they give the man 
a receipt for them. They are watched by two men all the time. There 
is a particular hold assigned to those goods, and after they are loaded 
and the hatch cover is put on, the hatch is sealed and locked with 
Yale locks, and there is nobody on board the boat who has a key to 
to those locks. The superintendent at the other end of the line has 
the key, and when the boat gets down there that is unlocked and 
opened up and tallied out as it is taken out of the hold and put on the 
dock, and it is put in behind a railed section of the pier, an iron rail, 
and men with clubs, and then it is handed over to the consignee. 

In other words, it is guarded every minute; each step is checked. 
But it is a demonstration of what can be done. In many cases on 
some of the other lines the crew help themselves to the cargo. There 
are any number of cases where it is believed that the steamship people 
knew goods on. their pier were being stolen. But, as I say, starting 
with the truckmen—there was an organized gang of truckmen in 
New York who had a-place up on Mercer Street. They would come 
for a man’s goods, drive the truck down there, and then the next day 
they would get a case—it might have been the same one, or they 


88 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


would get one of similar dimensions and weight, and the same 
marking—and substitute it for the original case. Cases have been 
opened up abroad that have been full of bricks, full of newspapers, 
and rubbish. In some cases the shippers have had the cases sent 
back to this country, so they could examine what was in them. 

Mr. Campbell. Mr. McComb, considering all the theft and pilfer¬ 
age losses that your companies pay, can you advise us what parts 
have occurred while the goods were in custody of the carrier? 

Mr. McComb. Well, that is very hard to say, because you are 
advised, say, that the case gets to Copenhagen, and it is opened and 
does not contain what it is supposed to have contained; it is hard 
to say at what point in the trip the substitution was made. 

Mr. Campbell. Are you insuring theft and pilferage under ware¬ 
house clauses? Is that customary? 

Mr. McComb. Yes. 

Mr. Campbell. Now, can you tell this committee, then, what pro¬ 
portion of the losses paid for theft and pilferage have occurred 
while the goods were in the custody of the shipowner? He is the 
man you are striking at. Now, what proportion occur while the 
goods are in the custody of the shipowner? 

Mr. McComb. I am not striking at the shipowner any more than 
any other man. 

Mr. Campbell. The underwriters here are striking at the very 
vitals of American shipping, the American shipowner. 

Mr. McComb. I suggested that all carriers be held liable. We 
are not striking at the shipowner particularly. We want to see the 
American shipowner and American shipping built up. 

Mr. Campbell. Can you tell us what proportion of the losses have 
occurred while the goods are in the custody of the carrier? 

Mr. McComb. No, sir. 

Mr. Rush., I thought it was a rule of the committee that there 
should be no cross-examination of witnesses. 

Mr. Campbell. I was not here when that announcement was 
made, and I assume that this hearing was called by the committee 
with the desire to get at the bottom of the facts of this great prob¬ 
lem, and it can not be reached by ex parte statements which those 
who happen to know, know are not entirely correct. Those parties 
have a right to question the witnesses. 

Mr. Lehlbach. The Chair announced at the beginning of the 
hearing that both in the interest of expedition and orderly proce¬ 
dure questions would be limited to members of the committee and 
those who officially sat with the committee, and that comments and 
cross-examination on the part of spectators of those who subse¬ 
quently intended to be witnesses would be eliminated, and, the 
Chair suggested that if erroneous statements of fact or expressions 
of opinion were uttered in the course of the testimony of witnesses, 
that those who took issue would have ample opportunity in their 
own time to correct them. 

Mr. Campbell. Mr. Chairman, I represent the American Steam¬ 
ship Owners’ Association, which represents in its membership 80 per 
cent and over of the privately owned American tonnage. We are 
not sitting at the table here. You have sitting with you Dr. Hueb- 
ner, an insurance expert, who was, and perhaps is, the expert of 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 89 

the Shipping Board; also a shipowner sitting there with the privi¬ 
lege of answering questions. To our best knowledge, Dr. Huebner 
has been in close consultation with the underwriters on this whole 
plan. You also have the representative of the Shipping Board 
sitting there, but the shipowner, at whom this legislation is strik¬ 
ing, if it is striking at anybody, is supposed to sit in the back¬ 
ground without the right to ask any questions pertaining to the 
matters which are laid before the committee, which we believe to be 
erroneous. Now, I assume—I am not personally acquainted with 
you, but I am personally acquainted with some of the other mem¬ 
bers of the committee—and I know that you want the facts. 

Mr. Lehlbach. Surely, we want the facts. 

Mr. Campbell. You can not get the facts unless there are ques¬ 
tions asked of the witnesses. 

Mr. Lehlbach. The fact is that Dr. Huebner is sitting here as ad¬ 
visor of both the committee and the Shipping Board with respect 
to insurance questions. Commissioner Lissner, a member of the Ship¬ 
ping Board, who was here this morning and who is in attendance 
and will be more or less at these hearings, and Mr. Gaines, of the 
Shipping Board, are sitting here with the committee as represent¬ 
atives of the Government, who desire to ascertain whether ways 
and means could be found to check what has been represented to 
the committee as a great waste. I think the committee can take 
care of the interests of all who are concerned in this problem, and 
can certainly afford as much opportunity to anyone who desires to 
speak for the shipowners, when it recognizes them in their own 
time, as if it should permit them to interrupt and argue with wit¬ 
nesses in the course of their development of their own views on 
the subject. I did recognize you expressly, Mr. Campbell, to ask 
a question or two, because I think every rule is to be enforced 
within the limits of common sense and reason, but it is the policy, 
and the committee determined before it opened this question that 
it would be its policy, not to permit the indulgence of crimination 
and recrimination between adverse interests in the course of the 
hearing, and that the views of the shipowners, the views of the ship¬ 
per, and the views of the marine underwriters can be fully pre¬ 
sented in their own time. They will have a knowledge of what each 
other says, and will have opportunity to answer those statements 

then. . 

Mr. Campbell. The question does not go to the question of our 
views. We may differ on the matter of theories and principles, but 
when you shut^ off the right to ask the other side regarding facts 
which they state to the committee, are you not limiting your exami¬ 
nation and your hearing here unreasonably ? 

Mr. Lehlbach. Certainly not. Why can not a misstatement of fact 
be corrected by a person liaving a knowledge of the true situation 
in his own time, as well as by throwing it at the person who is mak¬ 
ing the misstatement ? 

Mr. Campbell. I think that is true. You have got one against the 
other then, but some of these questions go beyond misstatements. For 
instance, asking him whether or not he can tell us what percentage 
of pilfering losses occurred while the goods were in the custody of 
the carrier goes right to the very vitals of this whole thing. That is 


90 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


not questioning a misstatement; that is asking for facts. If Mr. 
McComb can not answer it, I would like to ask Mr. Rush if he can 
answer it. Can you tell us, Mr. Rush, what proportion of pilfering 
losses occur while the goods are in the custody of the carrier ? 

Mr. Rush. Do I have to answer that now, or after Mr. Campbell 
has brought out his side ? 

Mr. Lehlbach. You can exercise your own discretion in that re¬ 
gard. 

Mr. Rush. By far the largest portion of it occurs while the goods 
are in the hands of the common carrier. The truckman is a common 
carrier; the lighterman is a common carrier; the steamship company 
is a common carrier; and the only portion which does not occur while 
it is in the hands of the common carrier is that small amount of theft 
that comes from the shipper’s own employees, and that amount which 
comes from the handling by the customhouse employees, for which 
the common carrier is not liable. The greater portion of it comes 
while it is in the hands of the common carrier, Mr. Campbell, in my 
humble opinion. 

Mr. Campbell. Now, may I ask another question? You went 
further than I wanted you to [laughter]. That answer is very neces¬ 
sarily true, but what proportion of these losses occur while the goods 
are in the custody of the shipowners? That is what I want to know. 
Can you tell me that from your figures? 

Mr. Rush. Not until you tell me in reply whether the shipowner 
is responsible or not for the truckman or the lighterman or what not? 

Mr. Campbell. That is a question of contractual liability. I am 
asking for facts. As a matter of fact, what proportion of these theft 
and pilferage losses occur, from your figures, while the goods are 
in the custody of the shipowner? 

Mr. Rush. If I answer it, can you prove it or disprove it? If you 
can, I will tell you they are all in his control. 

Mr. Campbell. Your refusal to answer shows that you can not 
answer the question. 

One more question, Mr. McComb. You spoke of carriers which 
had changed their bills of lading since the operation of the war. I 
should like you to submit the names of those carriers whom you 
know have changed the provisions of their bills of lading. 

Mr. McComb. 1 can get that for you. 

Mr. Campbell. 1 ou said that you knew. Can you give the names 
to the committee? 

Mr. McComb. I said the forms of bills of lading in use to-day are 
different from what they were before the war. 

Mr. Campbell, What carriers, can you tell us, have changed? I 
would like to get it so that the committee can check it up. 

Mr. McComb. One is the Dollar Line; that has a new bill of lading 
which they got out. I think, instead of answering that offhand, it 
would be a great deal better to get it from the various steamship 
companies which have put into effect their new bills of lading. 

Mr. Campbell. It happens that I drew that bill of lading long 
before the war broke out. 

Mr. McComb. Exactly in that form? 

Mr. Campbell. Substantially in that form. 

Mr. Edmonds. One question.' Mr. McComb, what is P. and I.? In¬ 
surance ? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


91 


Mr. McComb. Protection and indemnity. 

Mr. Edmonds. Has that been in existence for a long time? 

Mr. McComb. I really do not know. 

Mr. Edmonds. Does it cover this kind of losses? 

Mr. McComb. They can be covered by P. and I. 

Mr. Edmonds. Have they been covered in it? 

Mr. McComb. To some extent they have. I do not know to what 
extent, but some of them have; yes. 

Mr. Edmonds. It is a mutual arrangement between shipowners? 

Mr. McComb. Between different shipowners; liability insurance: 
that it what it is. 

Mr. Campbell. They carry it mutually between each other? 

Mr. McComb. Yes. 

Mr. Edmonds. This pilfering, and so on, was at one time carried 
in the P. I. ? 

Mr. McComb. It is yet carried. I do not know to what extent. 

Mr. Edmonds. Do they carry it all in the P. and I., when they 
carry it, or do they just carry part of it in the P. and I.? 

Mr. McComb. The ones that are in a club or association include 
theft and pilferage. 

Mr. Edmonds. They do it all? They do not insure with these 
companies, then, those that are in the P. and I. 

Mr. McComb. No. 

Mr. Edmonds. It is a separate institution altogether. Part of the 
insurance is written by one and part of it by the other? 

Mr. McComb. The shipowners’ liability is mostly done by mutual 
insurance. 

Mr. Edmonds. Why do they not do it all by this mutual insurance? 

Mr. McComb. It is mutual; insurance companies originally were 
insuring all risks with the stock companies that the marine com¬ 
panies did not assume. There is one thing, in England the policy 
is to carry the three-quarters collision clause, the idea being that if 
the owner had to pay one-fourth of his collision losses he would be 
more careful. That one-fourth of the collision is assumed by the 
shipowners mutually. 

Mr. Edmonds. That is, of collision. In pilferage they do not 
assume any of the P. and I. ? 

Mr. McComb. P. and I. losses cover shipowners’ liability in re¬ 
spect to cargo claims. 

Mr. Edmonds. They do cover it ? 

Mr. McComb. Yes. 

Mr. Edmonds. Why, then, do they insure it if it is covered in the 
mutual arrangement? Why do they insure in the regular com¬ 
panies. then? 

Mr. McComb. You mean when the shipowner insures, issues a bill 
of lading? 

Mr. Edmonds. It is only the shipowners’ liability that comes in 
there ? 

Mr. McComb. That is all. 

Mr. Edmonds. He covers his $100 liability in the bill of lading, but 
he does not cover the balance of it ? 

Mr. McComb. The shipowner frequently insures the shipper rather 
for the account of the shipper. He agrees to assume that he Avill 
insure with the marine company to cover the marine perils. 


92 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Edmonds. Why does he not put it in the P. and I. ? 

Mr. McComb. Because the P. and I. only covers shipowners’ lia¬ 
bility. It is a liability proposition pure and simple. The P. and I. 
does not cover marine business. 

Mr. Edmonds. He assumes the shippers’ liability of losses? 

Mr. McComb. It would be considered a straight marine loss, a 
loss by fire. P. and I. is the shipowners’ liability. 

Mr. Edmonds. It covers a personal liability also ? 

Mr. Met omb. Yes, sir. 

Mr. Edmonds. I should say it covers pilferage sometimes. 

Mr. McComb. That is hi£ liability. If he contracts and the ship¬ 
owner is called upon to deliver the goods, he is taking across and 
agrees to deliver them and he has a fire and is made liable for that, 
then the P. and I. would cover what fie is held liable for. 

Mr. Edmonds. Wouldn’t it be cheaper not to insure his goods at all 
and then require the shipowner to cover it in the P. and I. ? I do not 
suppose he could do that because of the limited liability in the 
contract. 

Mr. McComb. That is what establishes the shipowners’ liability. 

Mr. Kirkpatrick. P. and I. covers.the $100. 

(The following letter was ordered printed in the record:) 

Marine Office of America, 

New York, July 25, 1921. 

Hon. Geo. W. Edmonds, 

House of Representatives, Washington, I). C. 

Dear Sir: I should like to supplement my testimony in reference to the- 
above to emphasize the importance of proper delivery. 

Section 1 of the Harter Act makes it unlawful for a shipowner to insert any 
clause whereby they shall be relieved from liability for failure in making 
proper delivery of merchandise committed to their charge, and section 2 of 
this act makes it illegal to enter into any agreement whereby the obligation to 
properly deliver same shall in anywise be lessened, weakened, or avoided. 

Many steamship companies insert clauses in their bills of ladings which un¬ 
doubtedly have an effect of relieving them from liability in respect to proper 
delivery, and certainly their obligation to properly deliver same is lessened, 
weakened, or avoided altogether. 

Such clauses as the following appear in the bills of lading: 

“ The carrier’s responsibility in respect of the goods as a carrier shall not 
attach until the goods are actually loaded for transportation upon the vessel, 
and shall terminate, without notice, as soon as the goods leave the vessel’s 
tackles at destination or other place where the carrier is authorized to make 
delivery or end its responsibility.” Under this clause the carrier is permitted 
to discharge the goods from the vessel without notice to the consignee and end 
its responsibility immediately on discharge. 

“ If the vessel is prevented by quarantine from reaching her destination or 
from making due delivery of goods, or is detained at quarantine, the goods may 
be forthwith, without notice, discharged into lazarettos, craft, or other places 
immediately available, at the risk and expense of the shipper, consignee, and/or 
assigns, and such discharge shall be a complete delivery of the goods here¬ 
under, and all responsibility of the carrier is ended without notice as soon as- 
the goods leave the ship’s tackles. If by reason of quarantine, blockade, condi¬ 
tion of surf or weather, shortage of lighters, riots, or strikes, lockouts, stop¬ 
page or shortage of labor, of the carrier’s employees or otherwise, or other 
conditions, existing at the port of transshipment or discharge of the goods or 
elsewhere, or by reason of any of the excepted causes mentioned elsewhere, or 
by reason of any of the excepted causes mentioned elsewhere in this bill of 
lading * * * the goods may be discharged at any other port according 

to the convenience of the vessel. 

A steamer may commence discharging immediately on arrival and discharge 
“ continously day or night, Sundays or holidays, any custom to the contrary 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


93 


notw.thstanding, * * * and if the goods he not taken from the steamer 

by the consignee directly they come to hand in the discharging of the steamer, 
the master or steamer’s agent may be at liberty to enter and land the goods or 
put them into craft or store at the owner’s risk and expense, when the goods 
shall be deemed delivered and steamer’s responsibility ended, but the steamer 
and carrier to have a lien on such goods until the payment of all costs and 
charges so incurred. * * * Neither the carrier nor its property shall be 
held liable for the nondelivery of any goods not received on board the vessel at 
point of shipment, regardless of any acknowledgment or receipt contained in 
this bill of lading. * * * The master or agent of the vessel is authorized 
at the expense and risk and for the account of the shipper, consignee, and/or 
assigns, without notice to enter and discharge the goods, depositing them in hulk 
or craft or in or upon wharf, warehouse, public stores, or customhouse, or per¬ 
mitting them to lie where landed, or making such disposition thereof as the 
authorities of the port may direct, subject at all times to any lien of the carrier, 
including storage charges by the carrier, and to that end to employ such lighter¬ 
men, truckmen, warehousemen, wharfingers, or other agencies * * * who 

shall be deemed agents solely of shipper, consignee, and/or assigns, and not of 
the carrier, the latter being hereby relieved of all responsibility for or in respect 
of the goods, without notice to any person whatever as soon as the goods leave 
tin* vessel’s tackle.” 

There are many clauses of s'milar import in these bills of lading, but the net 
result of them all is to give the carrier the right to either bring the goods to 
the port to which they are consigned or any other port and there, without any 
notice to the assured, to put them on a dock or have them lightered ashore. 
In respect to lightering goods, the steamship agent has the liberty to make a 
contract with lightermen, exempting them from all liability, and the steamship 
company’s liability ceases when they put the goods aboard the lighter. If the 
consignee does not receive all the goods shipped to him, he has to prove two 
things. First, that the goods were loaded on the ship, as the steamship com¬ 
pany specifically provides. (The bill of lading, which is an acknowledgment 
that the goods have been received and is a receipt for the goods, is of no effect 
unless you can prove that goods were loaded on the ship.) This is difficult to 
prove if the steamship people try to prevent you from proving it. However, 
after proving that they d'd load the goods aboard the ship, it is necessary to 
prove that they delivered these goods to a lighterman. The lighterman is ex¬ 
empted from all liability and is employed by the steamship company, even 
though it is for the account of the shipper or consignee. The steamship com¬ 
pany can select for lightermen only those who will not keep track of what is put 
on the r lighters. As they have no responsibility, there is no necessity for them 
to keep track of what is loaded on their lighters nor what they put ashore. 
Therefore, it is very difficult to prove that the steamship company did not deliver 
the goods to the lighterman. The lighterman can store them on board his 
lighter without giving any notice to the consignee and run up storage charges, 
or can put them on an open p er without notice to the consignee. When the 
consignee is ultimately able to locate his goods, some of them may be missing, 
and it is almost an impossibility to tell where the shortage took place, and it 
would not be surprising if the steamship company blamed the shortage on the 
lighterman. 

The following is a letter from a steamship company, showing that it is a cus¬ 
tom to load their cargoes into lighters, and their responsibility ends when the 
cargoes are put aboard the lighters: 

“ Cargo on the west coast is delivered by steamer into lighters alongside, 
where ship’s responsibility ceases. 

“ The cargo is taken from the lighters in the customhouse for examination and 
is held pending presentation of bill of lading and consular invoice and then re¬ 
leased, upon Ihe payment of duties and charges, to the legail claimants. 

“The agent of the steamer has no jurisdiction over the cargo after it leaves 
the ship.” 

I believe that it is the nonobservance of the feature of making proper delivery 
that is responsible for the great amount of shortage. 

No matter what kind of regulations we may make in this country in refer 
ence to carriers. Congress has no authority over any concern which operates 
exclusively in a foreign country, such as lightermen, and it will be necessary 
to make some reciprocal arrangements with foreign countries, under which 
lightermen, truckmen, and other similar carriers can be held responsible. 


94 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


The report of the imperial shipping committee, paragraph 41, page 10, states 
that this should be the subject of representation and other pressure upon the 
governments or authorities responsible. 

In case of a shipment from Chicago to Paris, the ocean steamer which takes 
the goods across the Atlantic is only one of a number of carriers who will have 
jurisdiction over the goods during their entire voyage, and we will not have a 
proper system of transportation until arrangements are effected whereby the 
original carrier in Chicago may issue a bill of lading which will be binding on 
all subsequent carriers until the goods are delivered to the consignee in Paris 
and a receipt is obtained from him. 

Our laws can be made to cover the railroad and steamship journey from here, 
but it will require an international agreement to hold carriers abroad under 
bills of lading issued here. I do not believe that proper delivery can be over¬ 
emphasized. 

In reference to the crews of steamships stealing goods, the following is an 
extract from a letter written by the American Consulate General, dated Ha- 
bana, Cuba, October 18, 1920, addressed to the Hon. The Secretary of State, 
Washington, D. C.: 

“ In view of the circumstances which will be related hereafter, I authorized 
the captain of the port to send the members of the crew to the immigration 
station as fhst as encountered, to be retained there subject to my orders. It 
becomes my duty to state here that a number of these men protested to Mr. 
Lathrop against being sent to the immigration camp, maintaining that they had 
ample funds to take care of themselves, and this in spite of the captain having 
been unable to make any advances to them for a matter of three weeks through 
lack of funds.” 

This was a case where it had been suspected that this crew were, profiting by 
the sale of the cargo. 

Inclosed is an article from the New York Sun to the effect that Stephen J. 
Dunleavy of the International Mercantile Marine stated to Judge Samuel 
Fleisehmann in Jefferson Market Court that in his opinion at least $5,000,000 
worth of stuff had been stolen from that steamship company during the last 


year. 

Respectfully, yours, 


S. I). McComb, Manager. 


P. S.—The bills of lading from which the above have been quoted are in¬ 
closed herewith, with paragraphs marked “ X.” 


STATEMENT OF MR. LOUIS F. BURKE, OF SOUTH ORANGE, N. J. 


Mr. Burke. I am one of the marine managers of the Home In¬ 
surance Co. 

Mr. Chairman and gentlemen, I want to indorse the statements 
of Mr. Rush and of Mr. Winter and to agree with them in the 
remedies they have suggested. I shall not take very much of your 
time. I want to say, as a preliminary, that I will not undertake to 
discuss the overseas carriers of merchandise, because it has been the 
custom of our office to avoid theft and pilferage, which is particu¬ 
larly under discussion, for the reason that our observation has been 
that it is rather a disastrous part of the business. While we can 
not avoid doing it in all cases, the bulk of that which we do is not 
sufficient to base any really valuable statistics upon. We have been 
for a great many years interested in the insurance of goods during 
land transit and while in coastwise ships. 

I may say that underwriters, like most other people, can be sepa¬ 
rated into two groups, roughly, those who learn bv their mistakes 
and those who do not. I think nations might very well be so classi¬ 
fied. too. This country has had a doctrine, which is an ancient one, 
that a carrier may not exempt himself by contract from the results 
of his own negligence, and there has grown up around that doctrine 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


95 


a system of practices which have had the countenance of the courts, 
to a more or less extent, which has permitted the carrier, by cleverly 
drawn clauses, to contravene the intention of the common law, and 
practically exempt himself from everything but the negligence lia¬ 
bility. 

I think that no class of people connected with American commerce 
know more definitely the results of that departure from fundamental 
honesty and integrity than do the underwriters. They have had to 
pay the bills. It has been the experience of all underwriters that as 
the carrier has succeeded in either limiting or exempting himself 
from his liability, his care of what was committed to his care has 
slackened, and the evils which are upon us to-day have been a steady 
and very natural growth of practices which have crept in upon the 
business. No sane man would undertake to deal with a bank on the 
principle that, provided the bank secures a safe vault in its banking 
room, it should not be responsible for any negligence in the care of 
its depositors’ funds; yet in such a case as that you would merely 
lose the money which you had on deposit with the bank. The losses 
which the merchant suffers from committing his goods to the carrier 
are not limited by the value of these goods and are not compensated 
for by the replacement of money which those goods were worth. He 
loses what is much more valuable to him in many cases. He loses the 
good will of his customers, and ultimately, if such practices proceed, 
he loses his market, and so there is beyond the money value of the 
goods themselves a vast loss which can not be computed. It is the 
observation of all of us that within the last few years, particularly 
theft and pilferage, losses have very greatly increased. I wish that 
Mr. Lissner were here, because he asked a former witness a question 
which I was in position to answer. He asked if any estimate could 
be given of the increase or otherwise of losses of goods carried by 
land carriers. I want to say that we have statistics from our own 
office which show that during the years 1916 to 1920, inclusive, as 
compared with the years of 1911 to 1915, inclusive—that is, two 
periods of five years—that the losses by land carriers increased a 
trifle less than 1 per cent of three times the former losses. In other 
words, in the first period of five years the loss ratio was 14.31 per 
cent. In the last five years the loss ratio was 132.53 per cent. So 
that taken together the loss ratio over 10 years showed a very heavy 
loss, but not quite 100 per cent—very nearly. So the losses of the last 
five years spoiled the record of 10 years. Now, I may further say 
that that loss of 132 per cent during the last five years is not spread 
evenly over the whole five years. During that five years the first 
year or two of the five years developed a vast increase in the per¬ 
centage of losses, and it became necesary for us to so reform our 
underwriting as to try to get rid of the things that were bringing 
the heaviest losses, the conditions of the policies and kind of mer¬ 
chandise. We found it necessary to eliminate from our coverages 
certain kinds of merchandise. Let me enumerate, to give you an 
idea. We refused not only to insure shipments of gloves but of 
ostrich feathers, furs, ready-made clothing, shoes, and rubbers goods, 
such as rubber overshoes, etc. 

Mr. Lehlbacii. This is on the land carriers. 

Mr. Burke. On land carriers. Then, on further dissecting our 
business we found that there are certain lines of goods that were 


96 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

particularly susceptible to pilferage, and we refused to write those 
classes of goods against pilferage. But in spite of this elimination 
and discrimination against the highly liable goods the last period 
of five years was nearly three times—almost exactly three times— 
what it was the previous five years. 

With regard to coastwise carriers, the situation was not quite so 
grave. In the second five years as compared with the first five years, 
the losses very nearly doubled but not quite. The fact that they did 
not increase more than they did was also due to a reform in the 
kind of underwriting we did—the people whom we insured, and the 
conditions under which we insured them, and the kind of goods 
which we would consent to cover. Almost the entire increase in the 
loss ratio has been due to theft and pilferage.* There are some kinds 
of goods, some classes of trade that we have had to say we absolutely 
will not write at any entertainable rate and many others in the 
last five years have increased the premium as much as 300 per cent, 
and still the loss ratio stands as I have stated. 

I think that is all I have to say to you, gentlemen, I thank you. 

Mr. Lehlbach. If there are no questions of Mr. Burke, the next 
witness will proceed. 

STATEMENT OF ME. WILLIAM H. McGEE OF WILLIAM H. McGEE CO. 

Mr. McGee. I represent the marine managers, managers of marine 
insurance departments in the St. Paul Fire & Marine Insurance Co., 
the Phoenix Insurance Company of Hartford, the Great American 
Insurance Company of New York, the Providence Insurance Com¬ 
pany of Providence, and a number of others. It is not necessary to 
detail them. 

Gentlemen, I would like to indorse the resume of this situation 
that was given by Mr. Bush. I think that he has covered the ground 
pretty thoroughly. Mr. Winter has likewise covered the main points 
which I also indorse. I say that rather than to traverse again the 
ground that they have once gone over. 

It seems to me, Mr. Chairman, that this question which is before 
your committee is after all an exceedingly simple one; rather it is 
not at all complicated. It is really very simple. I think it very 
largely represents or conveys this question. Shall we or shall we not 
go back to the Harter Act? Shall we restore that part of the Harter 
Act which the courts have whittled away ? Shall we or shall we not 
stop a very bad leak? The Harter Act as it was enacted covered 
all that the underwriters say that it is necessary to do in this situa¬ 
tion. We do not think that it is necessary to go far afield and intro¬ 
duce a lot of reforms or introduce new methods to complicate the 
situation. If we can get back to the Harter Act we will have cov¬ 
ered the ground. If we Can get back to what it was intended to do 
we have covered the ground. The Harter Act was pretty well tried 
out. It produced most excellent results, and after its enactment and 
after it had been tried out, Canada and Australia first adopted it 
From present appearances it looks very much as if England is 
likely to adopt something of this same kind. 

I do not think anyone expects the shipowners to do all these things 
for nothing. The shipowner should receive proper compensation for 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 97 

the services he renders and for the liabilities that he assumes. The 
ways and means of arriving at that are mere matters of detail, and I 
believe that these things would very quickly adjust themselves. I 
think the competition between the various steamship lines would 
very quickly bring the thing to a standard basis. Mr. McComb has 
read to you two or three bills of lading. He has brought out a great 
many interesting facts. He has brought out some details that I was 
not altogether familiar with. The shipowners by one means and 
another have evolved a very elaborate document that is confusing 
even to lawyers. It is extremely confusing; it is extremely contra¬ 
dictory; and I think that all the layman can read out of the usual 
form of bill of lading is that Mr. Shipowner contracts to do abso¬ 
lutely nothing but to receive freight and take precious good care that 
he does, because he wants his freights. If the shipowner takes back 
this thing, if there is put upon the shoulders of the shipowner those 
liabilities and responsibilities which he is shirking and denying by 
subterfuge and by curious devices, he can take care of himself. If 
the shipowner receives my goods or yours and he acknowledges that 
he received them in apparent good order, why is he not responsible 
for the safe delivery of these goods, for the safe custody of them, 
and for the care of them ? Certainly no one but he can do it. The 
owner of the merchandise can not follow them through. They are 
entirely out of the merchant’s hands, and if the shipowner does 
assume these things, is it going to be such a terrible burden upon 
him? The obligation of the shipowner is to take right and proper 
care of the goods. I do not think that anything of an unreasonable 
character is asked of him. I was not aware of the manner in which 
the Bull Line were able to protect special goods. If they can do it 
with such shipments as are made under that particular form of bill 
of lading, why not do it with all ? 

The question of P. and I. insurance has been dwelt upon. I 
think there are very few people in this country that really 
thoroughly understand that subject. I certainly do not; but there 
are some features of it of which I think I have some knowledge. 
It may be shadowy, but my understanding is that P. and I. in¬ 
surance is taken out, if not by all the shipowners, by a great 
many of them, by far, the vast majority of them, and the proposi¬ 
tion of P. and I. insurance is to divide on some sort of equal 
basis between the various shipowners who become members of 
these clubs the losses they incur in the course of their trade. As 
an illustration of that, I 'believe that if one of the crew is injured 
P. and I. insurance covers it. If the shipowner must pay $100 for 
a case of goods which he has misdelivered or not delivered or 
carried on to another port or destination and piles up that with 
his list of overs, as I understand it, the P. and I. insurance pays 
him back that $100. In fact, I am inclined to believe that a great 
many of these clauses that are introduced into bills of lading are put 
there at the behest of those P. and I. clubs, of which there are quite 
a great many in England. I know of but one in this country, but I 
feel confident in my own mind that this Avhole bill-of-lading question 
comes back to what is more or less dictated to the shipowner by their 
P. and I. underwriters. 

60683—21 - 7 


98 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

However that may be, if the shipowner must conform to the Harter 
Act and if the shipowner is restored to the position in which he was 
when the Harter Act was enacted, the shipowner has a remedy within 
his hands. He has a simple and more or less economical way of pro¬ 
tecting himself. There is an economic principle involved in this 
whole matter of theft and pilferage, leakage, breakage, and things of 
that kind that are caused by the carelessness or recklessness or heed¬ 
lessness or cheapness of the steamship operators, and that is the 
terrible waste which is going on. Goods which are stolen, goods 
which are badly stowed and therefore produce losses are economic 
waste, and can the United States or any other country go on permit¬ 
ting goods in these times to be wasted? It seems to me that the stop¬ 
page of waste is one of those things we need to restore the world’s 
business equilibrium. 

Furthermore, it seems to me that the attitude of the shipowners is 
an absolutely unmoral one. It is an unmoral situation. He takes 
my goods and he does what he pleases with them. I have no means 
of watching or caring for them. He either delivers them or does 
not deliver them and all of the facts concerning those goods are in 
his possession. They are not in mine; they are not available to me. 
I can only get them" by going to his crew, going to his masters and 
mates, going to his records; it is within his power to conceal them 
from me. The situation is one which is and ever will be growing 
cumulative^ worse as long as the shipowner or any other common 
carrier or any other bailee is permitted to contract himself out of 
any and every responsibility for goods which are necessarily in the 
course of every-day dealings intrusted into his care. 

The bill of lading is full of words and clauses that are difficult 
to understand. When you talk about a bill of lading to a ship¬ 
owner he immediately talks about his right to contract, his right to 
protect himself, but has he the right to contract himself out of his 
responsibility? The cargo owner certainly should have a right to 
contract and say what sort of a contract he would enter into; but, as 
a matter of practical business, in how many cases and how many 
steamship lines in New York or in any other part of the United 
States, does the shipper of merchandise, unless lie happens to be a 
very big and a very powerful one—one who can operate his own 
ships if he so elects—in how many cases and how many times and how 
many shippers are there who can go to a steamship company and 
say, “ Here are my goods; I want a clean bill of lading ”? As a mat¬ 
ter of fact, the great majority of shippers have to take the bill of 
lading which is presented to them. Transportation of goods is an 
all-important arm of the country’s commerce, but it is not every¬ 
thing. The shipment of goods is very important. 

I am inclined to think that the shipment of goods is vastly more 
than merely the question of the shipowners, because if there are no 
goods shipped there is no shipowning. There is no cure for this 
situation excepting through the person or the corporation which 
has physical possession of the goods. It is idle for the carrier to 
say that he can not guard and protect the property intrusted to him. 
Somebody must do it and no one but the persons who have physical 
control can do it. 

The experiences with these things differ with different lines. 
There are some of the steamship lines which apparently have pretty 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 99 

good records for the carriage of goods. They seem to have managed 
to guard the goods. Therefore, is not the whole question answered 
by the reluctance of the shipowners to incur the matter of costs of 
protecting the goods ? Do not the evil conditions continue and grow 
only because the carrier is unwilling to take the proper care ? 

It is not a proper answer and is no answer at all to the situation 
to say that these things can be insured against. The loss is just as 
great. The economic waste is just as great. Because an insurance 
company has paid for the loss does not save the situation one bit. 
It really in some cases aggravates the question. The buyer of goods 
wants goods; he does not want insurance money. He wants to get 
his goods. He has bought his goods for the spring sale, he has bought 
his goods for the summer sale, and buys the goods in time to sell them 
to his customers. Instead of the goods he gets bricks or stone or 
paper or empty cases. He is left without the ability to sell goods. 
Before he can buy a fresh supply his season is past and gone. There 
has come to my attention a number of instances, a number of occa¬ 
sions, where shipments have arrived, for instance machinery, con¬ 
sisting of a number of parts, and very important parts of those 
machines have been missing. I know of one case where four separate 
and distinct shipments of those parts were made, and but one set 
got through to its destination, meaning that that machine was put 
out of commission for 18 months. Collecting three losses from the 
insurance company did not help that man a bit. 

It is a terrible discouragement to the country’s foreign commerce 
to have goods which should be received not received. Buyers in 
foreign countries get discouraged from buying goods in this coun¬ 
try. They say what is the use, we can not get our goods; and buy¬ 
ers in foreign countries are being driven, and it is one of the reasons, 
I understand, that is given in a great many cases as to why instead 
of buying goods from American merchants they buy them from 
England or from somebody else where better care is taken of goods. 

I would like to speak for a few moments about the bill of lading 
plan which was outlined by Mr. Robinson, and by the way, with all 
due deference to Mr. Robinson, and without any reflection upon 
him, he is not an underwriter, he is an insurance broker, and, there¬ 
fore, as an insurance broker his point of view is somewhat different 
from the underwriters. The dual bill of lading scheme that he pro¬ 
poses-seems to me to be an exceedingly complex matter. It seems 
to me to be a kind that would be exceedingly difficult to conduct. It 
seems to me that it would mean such an utter change of all business 
methods and shipping methods that it would be exceedingly de¬ 
structive of commerce. It seems to me to aim at forcing a merchant 
and shipper to conform to a set of rules that would be very difficult 
for them to clo. It seems to me that the result would be to drive our 
merchants and shippers under other flags than ours, under flags 
which would give to the shipper of goods the utmost freedom in 
certain respects. 

If it were practical, if it were successful, it would mean that each 
individual shipowner would insure all of the goods on a ship and 
instead of having one insurance company to go to to collect all the 
claims, the shipper having the one insurance company from whom to 
collect’all his claims, would be at the mercy of the shipowner at all 
times, and he would have a pretty hard time of it. It is pretty hard 


100 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


for the shipper of goods to get any money out of the steamship com¬ 
pany or railroad company in these days. If he was going to have to 
collect everything from them he would be in an impossible position. 
It would be impossible for a merchant to elect what kind of insur¬ 
ance he would accept, and I think you all know that every different 
merchant has his own particular pet way of insuring his goods. 
Some merchants who ship cottonseed oil in barrels, tor instance, 
know so well the class of package that they use for shipping that 
they can control things in such a way that they are perfectly will¬ 
ing themselves to carry the risk of leakage, but other merchants 
may want to insure against it, although using precisely the same 
packages. They used to say the shipment of flour from the western 
cities of Europe could be insured under any one of about fifteen dif¬ 
ferent forms of a policy, every one of them carrying a different rate 
of premium, but under a bill of lading scheme of this kind it would 
take such insurance as the shipowner has chosen to take out with his 
particular set of underwriters. A shipper by steamer A may insure 
under one way and a shipper by steamer B, owned by an entirely 
different steamship owner, in quite a different way. 

Trade routes have not been very much changed in the past three 
or four years. They seem to be coming back pretty well to normal 
conditions, to normal routes. We have a great many new steamship 
lines, to be sure, but, after all, trade routes remain just about the 
same. The custom of issuing through bills of lading covering goods 
from the interior seems to have been resumed. 

In using the word common carrier I think we are sometimes a 
little bit apt to think that means steamship companies alone. It 
does not. A truck man is a common carrier. A lighter man is a 
common carrier, and the lighter men very frequently are part and 
parcel of the steamship lines. A great many of the steamship lines 
have their own lighterage routes, and in those cases where goods are 
lightered the steamship company, as I understand, quite frequently 
sends their lighters over to places across the river so that the goods 
are really within the control of the steamship company in a great 
many of these cases. 

I come right back to the one point which I tried to make in the 
beginning—that this situation is not a complicated one at all, that it 
is nothing more or less than restoring something which was in exist¬ 
ence and which by one device and another has been whittled down so 
that the value of the Harter Act to-day has been practically destroyed. 

I think that is about all I want to say except to indorse what has 
been said very largely by Mr. Rush, by Mr. Winter, and by Mr. Burke. 

Mr. Campbell. May I ask two questions ? 

Mr. Leiilbacpi. If Mr. McGee is willing to answer them. 

Air. McGee. I am a most willing person when I know and under¬ 
stand a question. 

Mr. Campbell. I think from what you say that you are opposed to 
the system of insured bills of lading ? 

Mr. AIcGee. I am not; not necessarily. 

Mr. Campbell. Do you favor the steamship companies goino- into 
the practice of issuing insured bills of lading? 

Mr McGee I think you would infer from what I have been saying 
about dual bills of lading that I was not. 

Mr. Campbell. You do not. I just wanted that clear. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 101 

Mr. McGee. There are proper things for the steamship owner to do, 
and there are things that may not be proper—or, I would rather say, 
that are not necessarily proper. 

May I amplify that answer by saying one thing? I am not alto¬ 
gether in favor of it, because if they were issued I would be driven 
out of the business and I am in the insurance business. 

Mr. Campbell. You would either be driven out of business or the 
shipper would be paying for two insurances ? 

Mr. McGee,. That does not necessarily follow, because he may get 
under a bill of lading what you would call full insurance and yet 
not have full insurance according to his point of view. 

Mr. Campbell. As a condition to insuring cargo have you ever 
endeavored to compel shippers to ship their goods under bills of lad¬ 
ing where they deleted from them all those limitations upon their lia¬ 
bility, and particular^ deleted from them the loss-valuation clauses? 

Mr. McGee. We have tried it in some cases. We had very poor 
success. 

Mr. Campbell. Did the shipper refuse to do it? 

Mr. McGee. Not necessarily. The shipper said, “ Your competitor 
in that particular line of business takes these bills of lading, and I 
can not pay any higher rate of freight, and if the steamship owner 
deletes he wants something that I can not give him and remain in 
business.” 

Mr. Campbell. And incur higher freights? 

Mr. McGee. Mot merely a higher rate of freight, but prohibitive 
rate of freight. 

Mr. Lehlbach. Mr. Johnston, do you wish to speak at length? 

Mr. Johnston. Xot at length. 

STATEMENT OF J. F. JOHNSTON. 

Mr JoMnston. I am vice. president of the Appleton & Cox Co. 
(Inc.), representing the United States Lloyds (Inc.). I will make 
my speech brief by confirming Mr. Rush’s report in detail, and Mr. 
Winter’s, and particularly following in close detail that of Mr. 
McGee’s statement. 

Mr. Lehlbach. Are there any more underwriters as such who de¬ 
sire to be heard at the present time ? If not, the committee will stand 
in recess until 8 o’clock to-night, and will then hear the shippers. 

Mr. Buechmore. Might 1 have one of the copies of Mr. Rush’s 
statement, particularly the attachments to it, and return it here this 
evening or in the morning? 

Mr. Lehlbach. Does Mr. Rush have copies to spare? The chair¬ 
man himself has no copies at all, but if there are copies here and if 
they are available, I know of no reason why you should not. 

Mr. Buechmore. I intended that same request to apply to the 
amendment offered. 

Mr. Lehlbach. Let me make the suggestion that these documents, 
as far as the 'committee are concerned, are actually in the custody of 
the stenographer, who is supposed to incorporate them in the record 
of the meeting. If they are available there, there is no objection 
whatever. They will be "permanent records and there is no objection 
to examining them or having access to them, but I simply say the 
chairman himself has not them in his possession. 


102 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Campbell. Your notice to shipowners called for their pres¬ 
ence on Wednesday. Are you going to go on to-night with to-mor¬ 
row allocated to the shippers? 

Mr. Lehlbach. My own personal view was that we proceed with 
the shippers to-morrow, but it has been suggested that there are a 
great many witnesses representing the shippers and also the ship¬ 
owners. It has been suggested to me that unless we sit to-night and 
hear in part some of the shippers we might not get through with them 
to-morrow and have the time on Wednesday for you gentlemen. 

Mr. Campbell. I just wanted to know if you were expecting us 
to be here to-morrow? 

Mr. Lehlbach. I want to make absolutely certain that the people 
presenting this question from the viewpoint of the shipowners should 
have just as ample and full opportunity to state their views and posi¬ 
tion as these other interests. 

Mr. Campbell. I know that. 

Mr. Lehlbach. If we get through with the shippers to-morrow I 
presume representatives of the shipowners would be here anyhow, 
because they want to hear what the other people are saying; so we 
can start right in with them. 

Mr. Campbell. This hearing was called and notice sent to us upon 
an investigation of theft and pilferage, and it seems to me to have 
turned into a hearing upon proposed amendments to the Harter Act; 
or is this an independent investigation? 

Mr. Lehlbach. Some individuals of the committee may have 
knowledge of proposed legislation, but no proposed legislation has 
been called to the attention of the committee and the committee has 
started out w T ith absolutely a clean slate. It has not any remedies 
in mind, particularly, at all. It is seeking a remedy and is seeking 
suggestions of remedies. 

Mr. Campbell. It is an independent investigation, but not on 
pending legislation. 

Mr. Lehlbach. Absolutely independent. 

The committee will stand in recess until 8 o’clock this evening. 

(Thereupon the committee recessed until 8 o’clock p. m.) 

evening session. 

The subcommittee reconvened at 8 o’clock p. m., pursuant to the 
taking of the recess, Hon. Frederick R. Lehlbach (chairman) pre¬ 
siding. 

Mr. Lehlbach. The first witness this evening is Mr. Herrick. 
Are you ready to proceed, Mr. Herrick? 

Mr. Herrick. Yes, sir. 

Mr. Lehlbbacii. Will you give your name to the stenographer, 
and also state fully all the various interests you represent. 

STATEMENT OF MR. CHARLES E. HERRICK, REPRESENTING THE 
INSTITUTE OF AMERICAN MEAT PACKERS. 

Mr. Herrick. I am chairman of the traffic committee of the In¬ 
stitute of American Meat Packers; I am a member of their foreign 
trade committee; I am chairman of the foreign trade committee of 
the Illinois Manufacturers Association; I am a member of the in- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


103 


terstate and foreign trade committee of the Chicago Association of 
Commerce; I am president of the World Trade Club. I mention 
aJ] of these things simply to give you a little idea of my interest in 
foreign trade. 

If the committee please, I would like to start back a little further, 
perhaps, than any of the discussion we have had to-day, and that is 
with the freight contract that the shipper enters into with the 
freight broker and the representative of the steamship line. It is 
our practice, as probably you know, to book our freight in advance 
with such agencies, and, as the packers are shippers almost exclu¬ 
sively of perishable products, great care must be taken in the selec¬ 
tion of boats suitable to transport that kind of traffic. We select, 
therefore, with the greatest care we know how, a particular bottom 
to transport the shipment, only to find that the freight contract 
with all of its provisions is practically set aside by that provision 
in the bill of lading which stipulates that the bill of lading is sub¬ 
ject to the terms and conditions of the ocean bill of lading in use 
by the carrier at the time the shipment moves. Therefore, regard¬ 
less of the care we may take in making our preliminary arrange¬ 
ments, that may be all offset by the boat in question being with¬ 
drawn or diverted/ or, at the convenience of the ocean carrier, an¬ 
other boat substituted in her place. 

Against that we seem to have no recourse at present. In all con¬ 
tracts, for example, with buyers in Holland, it is especially stipulated 
that such shipments must come forward by direct boats, or else the 
buyer in Holland is privileged to reject the goods on their arrival 
over there. It has happened on not a few occasions that the boats 
that were scheduled to sail direct to Rotterdam, for example, have 
been diverted to other ports for the profit of the operating company; 
and, therefore, instead of Rotterdam being the first port of call, it 
may be even the fifth or sixth. This results in very considerable delay 
in the handling of these perishable shipments, and has, on a number 
of occasions, entailed a very serious loss. That is done entirely for 
the benefit of the ocean carrier and without our consent and over our 
protest. The idea of incorporating that sort of a provision in our 
contracts with the foreign buyer, with the Rotterdam buyer, is that, 
otherwise, he fears that through long delay after shipment has been 
made, through falling markets or on account of the goods becoming 
stale, or various reasons of that kind, there will result to him a very 
serious loss. 

Not only do we have that to contend with, but in endeavoring to 
book this freight we have repeatedly asked for a copy of the ocean 
bill of lading that is to govern this particular contract. We are told 
in reply that that can not be furnished, and the reason given is that 
they do not know what sort of form of bill of lading will be in use 
when these goods reach seaboard. We are, therefore, compelled to 
accept a contract the terms of which we do not know and can not 
know. This works a great hardship on the shipper. 

Further, I want to say a word in behalf of the beginners in export 
trade, of whom there are a number—especially at the inland points— 
who are not versed on the Harter Act and whose attorneys perhaps 
are not. The ordinary attorney at an inland point has had very little 
occasion to come in contact with marine law. He is not posted on it. 


104 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

The shipper takes one of these bills of lading to his attorney and says, 
“ 1 have suffered such and such a loss.” The attorney proceeds to read 
that bill of lading and says, “ Well, there is nothing you can do about 
it; you see, they have exempted themselves from liability in this bill 
of lading.” That may be in direct opposition to the Harter Act, and 
in many cases no doubt is; but the shipper simply swallows his loss 
and, as a rule, does not make a second attempt at that kind of export 
business. 

Then there is another class of losses to which I would like to call 
your attention, and that is the loss of the big shipper in small amounts 
but which aggregate a very considerable total. Some of the members 
of our institute in Chicago have told me that they have, perhaps, 
against a single line, as many as 50 claims, perhaps no one of them 
calling for a loss of more than a hundred or two dollars, and it is a 
question of fighting each claim individually through the courts at an 
expense beyond what they could hope to recover. So those 50 claims 
of $100 apiece or $200 apiece, as the case may be, make in the aggre¬ 
gate a very considerable loss for that shipper. 

I do not know how familiar your committee is with the hearing 
which was held here in Washington last November before the Inter¬ 
state Commerce Commission, Commissioner Woolley, in regard to a 
uniform bill of lading. I wish that it was not so voluminous so that a 
very considerable portion of that could be read into your record here, 
for it sets forth very explicitly and very completely many of the 
objections of the shippers to the present forms of bills of lading. It 
was the hope of the shippers that out of that hearing would come 
a uniform bill of lading for ocean movement of goods that would 
give them the same definite knowledge of conditions that they have 
of the inland bill of lading, but nothing has as vet taken place. I 
understand that the commission have now made up their minds that 
they do not have the necessary jurisdiction to bring that about. And 
so may I suggest to your committee that they, or some other Govern¬ 
ment organization—the Department of Commerce, the Federal Trade 
Commission, or the Interstate Commerce Commission—be given au¬ 
thority by law to specify a uniform style of bill of lading which will 
protect the shippers, the shipowners and the underwriters, and is 
equitable in form. 

Perhaps at this point I might call your attention, to a few of the 
clauses that appear in those bills of lading, which are so manifestly 
unjust to the shippers of perishable products that probably comment 
is unnecessary. For example, do you know that the shipowners re¬ 
serve ,the right to ship live stock on the same decks with shipments 
of hams, for example, and they relieve themselves of the responsibility 
of contamination of those shipments of human food from the urine 
and manure, or from drainage from the stalls, of those live animals ? 
It reads like this in some of the bills of lading, naming over the va¬ 
rious things from which they are attempting to exempt themselves: 
Fluids, decay, hook marks or injury from hooks, stowage or contact 
with or smell or evaporation from any other goods, or damage from 
coal or coal dust, or leakage or flow or contact with urine, manure,, 
drainage of any animals carried in said ship, or from their stalls. 

Almost equally objectionable, of course, is their practice—I say 
u practice ” because it has come to our attention in more cases than 
one—of stowing shipments of meats in holds that have been used for 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 105 


bunkering. If fine coal dust works into the package it destroys the 
value for human food of shipments of that kind. 

Another thing that they attempt to relieve themselves from is the 
damage to the shipments from heat. It is manifestly impossible to 
ship these perishable goods if they are stowed near boilers or steam 
pipes, or anything of that kind that will cause heat. Deterioration 
is absolutely certain. We pay for the shipment of provisions a rate, 
double the rate for ordinary stowage, for what is known as 35 to 40 
degree space—that is, air-cooled space in the holds of the steamers— 
with the expectation at least that the temperatures will be carried at 
35 to 40 degrees. But when we get our bills of lading we find there 
is a provision there that they are not responsible for changes in tem¬ 
perature. In other words, they have taken tAvice as much money from 
us for the carriage of those goods in a refrigerator chamber and then 
relieve themselves of the responsibility of even putting them into 
such a chamber. 

Here is another clause that has worked a great hardship—that the 
carrier shall not be liable for any claim Avritten notice of which is 
not given before the removal of the goods; acceptance of delivery to 
be a waiver of all claims of which such notice has not been given. In 
other words, Iioav can a consignee knoAV whether he has a claim or not 
until after he has gotten possession of the goods and removed them? 
And yet here they disclaim any liability unless he files notice in ad- 
A 7 ance of the time Avhen he can possibly know Avhether he has a claim 
or not. 

Another contention that I met with on one of my last trips across 
the water was at Antwerp. The shippers there took the stand that if 
they delivered one hoop or one stave of a package they had then com¬ 
pleted delivery of the package. 

Mr. Lehlbach. You mean the shipowners? 

Mr. Herrick. The shipoAvners; yes. 

Mr. Lehlbach. I understood you to sav the shippers. 

Mr. Herrick. Well, the carriers; the shipoAvner. I said to them 
each tierce has about a dozen hoops and probably more than that 
staves; so that all you have to do is to knock doAvn one tierce and de- 
lAer a hoop and a stave and call that 9 packages, or 10 packages, 
and then take for your oAA T n use the 10 full packages—because you 
claim delLery of a complete package when you have delivered one 
hoop and one stave. 

In this hearing last NoAvmber it Avas brought out that the limita¬ 
tion of value—that is, the $100 limitation which has been referred to 
so many times to-day—Avas entirely inadequate. One Avitness testi¬ 
fied that that limitation was in effect at a time when the ocean rate, 
say NeAv York to Liverpool, Avas 10 shillings a net ton. In other 
Avords, about 10 cents for 100 pounds as against the present-day rate, 
even after the decline which has taken place, of 75 cents per 100 
pounds. That $100 valuation has brought about a very serious con¬ 
dition, and I may say, too. that this is not the loAvest \ T aiuation placed 
by the carriers; for the Farber Line, for example, to Marseille, has 
fixed a rate of 1 franc per kilo. At the present rate of exchange that 
is betAveen 3 and 4 cents per pound, Avhile perhaps the average pack¬ 
ing-house product Avould be valued at 20 to 25 cents a pound. Not 
only do they put in their bills of lading, but they hide behind it in 
case of loss and refuse to settle on any other basis. 


106 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


In considering the various clauses that were objectionable and in 
suggesting a wording for the hoped-for uniform style of lading, that 
conference last November suggested that the carriers’ liability be cov¬ 
ered in this section: 

The carrier shall not be liable for loss, damage, delay, or default 
occurring from any other cause whatsoever, except where the negli¬ 
gence of the carrier is the proximate cause of the injury com¬ 
plained of. 

And perhaps in that connection I might give you the definition 
which was used at that hearing of that term “ proximate cause.” 

A proximate cause has been defined as one which in natural se¬ 
quence, undisturbed by any independent cause, produces the result 
complained of. 

Now, certainly that clause is terse, does not need the construction 
of many courts and of years of experience to definitely fix the liabil¬ 
ity of the carrier. 

The $100 valuation seems to be a thing that has come down from 
time immemorial and seems to me a sacred matter with most of these 
shipowners; because they have refused, in most cases, to modify it. 
Mr. Burchmore calls my attention, in the testimony that was given 
last November, the carriers stated that the rate of freight had been 
fixed on the basis of this $100 valuation per package. But it trans¬ 
pired. in the evidence given, that shippers had endeavored to find out 
what the rate of freight was on a higher valuation and had been told 
repeatedly that they had no other tariff. So that they were not able 
to pay even a higher rate and get a higher valuation in order to 
protect themselves. 

Mr. Campbell. What company was that? 

Mr. Herrick. The International Mercantile Marine. 

Mr. Hickox. Oh, no; you are entirely mistaken about that. 

Mr. Herrick. It can be proved and was proved at the hearing. 
Now, this feature in regard to boats sailing to other ports than the 
one for which freight is contracted, as per advertised schedule. Here 
is the experience of one of the Chicago packers. They refer to the 
Cunarcl liner Vasconia, [Reading:] 

On May 24, 1921, the Cunard liner, Vasconia , cleared for us eight cars of 
provisions from New York to London. When space was contracted for. steamer 
was supposed to sail direct to London, and it was not until after she had cleared 
New York that we learned she went to Norfolk to complete loading. Despite 
the 3-cent rail differential we would not consider shipping perishables to Nor¬ 
folk during the summer months, yet after paying the higher rail rate to New 
York this steamer took our eight cars to Norfolk where the vessel was detained 
several clays in completing loading. The Vasconia finally arrived at London 
June 9, our product was unloaded June 17, when 249 boxes were found to be 
slimy, moldy, and tainted. 

I may say these boxes contained 500 pounds each, approximately, 
in weight. 

Mr. Lehlbach. Of what? 

Mr. Herrick. Packing-house products; probably hams or bacon. 
[Reading:] 

The Cunard people claim their bill of lading gives them privilege of changing 
steamer’s route and will no doubt refuse payment of our claim. 

It should be made unlawful for a boat to change its advertised schedule after 
perishable produce has been loaded aboard, except, of course, in case of dire 
distress, or to save human life, etc. 


THEFT, ETC., OF EXPORT AXD IMPORT SHIPMENTS. 107 

As regards the question of pilferage on shipments made to various 
PP m ; s ' 1 has come to the attention of the Institute of American 
Meat 1 ackers that some of these lines apparently are provisioning 
their mess by simply withholding shipments and paying the $100 
valuation, that being only a fraction of what they would be com¬ 
pelled to pay if they bought the goods in the open market. And I 
have here somewhere an example of that, where a certain Chicago 
packer shipped some very high-priced sausage, of which nearly. 25 
per cent w r as either not delivered at all or they delivered empty cases. 
It was the steamship Pesaro from New York; arrived Genoa Italv, 
April 19, 1920. [Reading:] 

The attached is a translation of survey made on consignment of 500 cases of 
sausage shipped from New York to Genoa on S. 8, Pesaro, March 22, 1920. You 
will note from the underlined portion, about the middle of the first page, that the 
damage was due to “pilferage, which may have occurred in the hold of the 
steamer and partly during the stay of the cases in the lighters.” From the last 
paragraph, on page 2, you will see that the shipowners declined to intervene at 
the survey, declaring that according to the b Us of lading they are not respon¬ 
sible for pilferage nor for weight. 

This is in direct opposition to the Harter Act, but it would take an expensive 
lawsuit to force the steamship company to recognize their responsibility, and 
even that would not set a precedent for the settlement of future claims. 

In cases like this we are practically never able to collect part or all of the 
loss from the lighter company. 

Then follows the translation of this correspondent, with which, 
perhaps, you are interested, giving the figures, weight, etc.; but it 
shows the surve} 7 that was made there and the resulting loss. There 
was a shortage of 38 cases out of 497. 

The. facilities for shipping to Porto Pico have been mentioned. 
Here is a memorandum in regard to the line serving Porto Pico. 
[Reading:] 

Both the New York & Porto Rico and the Bull Insular Lines, operating from 
New York to Porto Rico, limit tbeir liability to $100 per package for large and 
$8 per cub e foot for small packages. We have pilferage claims on almost 
every trip, and while they are individually small, they are considerable in the 
aggregate. 

These losses of food product occur so regularly that our San Juan office is 
firmly of the opinion that the steamship people provision their crews’ mess 
table from our shipments, knowing they can settle for same under the limited 
liability clause in their bills of lading. 

Now, here are copies of New York & Porto Pico and Bull Line 
ladings, which may be of interest to you, and which I will give to 
you as exhibits, if you please. There are clauses marked that I 
would like to call your attention to, especially in regard to Avhat I. 
have just said. 

(The bills of lading referred to were filed with the committee.) 

There is another practice which has recently sprung up, and that 
is when there is a loss, evidently due to bad weather or to improper 
stowage, Lloyd’s appoints surveyors at the point of destination. 
Those surveyors are almost invariably either representatives of the 
steamer lines or of the underwriters. They make a survey and ar¬ 
bitrarily fix the value of the loss, and in some cases it is 60 per cent 
due to rough weather and 40 per cent to pilferage; in some cases 
it is 50-50, and in some cases it is 40 per cent bad weather and 60 
per cent pilferage. Our contention is that the pilferage occurs as 
the result of the breaking of these packages, and in every case rough 


103 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

handling, therefore, increases not only the danger but the actual 
pilferage which takes place. In other words, a broken case lends 
itself very easily to pilferage. 

Here is a case of goods shipped on the steamship Chicago , on 
which 11 boxes were short delivered and 11 boxes delivered empty, the 
steamship company expecting to settle, as per bill of lading clause 
No. 1, at the rate of 10 cents per pound. 

Quite recently the French line have issued a new bill of lading 
which places the limit of their liability at $100 per package. While 
it is insufficient to protect shippers on packages ranging from 400 
to TOO pounds, the ridiculous part of it is it is more than ample 
on the smaller packages. In that connection, of course, it is evident 
that the $100 package liability would cover a Rolls-Royce shipped 
in a box, as they are accustomed to ship them, or would cover a 
small package such as the packers forward, containing 56 pounds 
of lard. In other words, they make no distinction as to the size of 
the package; but claim the $100 liability as a maximum, or the in¬ 
voice value if it is less. The French Line liability was limited to one 
franc per pound, which even calling a franc 10 cents, which is above 
the present exchange market, is entirely inadequate. 

In our freight contracts, as I think I said before, we stipulate that 
these boats are to sail direct to the ports for which they are sched¬ 
uled, but no attention whatever is paid to that stipulation and they, 
for their own profit, sail to other parts; and, as additional cargo 
is offered them, having previously booked with us a certain amount 
of freight, an initial booking, they get that on board and then pro¬ 
ceed to canvass the country over for additional freight and, as an 
inducement, offer to make the first port of call whatever the other 
shipper desires. 

Here is a case where a shipment of that kind was booked on De¬ 
cember 21, 1920, of 1,000 tons of refrigerated space. I wish to call 
your attention to the fact that refrigerated space usually carries 
double the rate of ordinary space. The rate in this case would even 
be higher than that, because this is a temperature of 15° or lower, 
on the Shipping Board steamer Guimba . which was scheduled to 
sail on or before January 7, 1921, for Hamburg and Rotterdam, 
800 tons to go to Hamburg and balance to Rotterdam, Hamburg to be 
first port of call. [Reading:] 

Later, on December 29, the I. F. C. notified our New York office they were 
having difficulty in getting sufficient cargo to make a full load, although it was 
originally understood that if they could not get about 1,100 tons from William 
Davies Co. to Hamburg they would proceed with only our cargo on board. 
They then asked our permission to accept a consignment of apples for Glasgow, 
and to make Glasgow the first port of call, steamer to remain in that port only 
five clays, then to proceed to Hamburg, thence to Rotterdam, arrival date at 
latter port to be about February 5. 

On account of delay entailed, rapidly falling market, and the added possi¬ 
bility of damage to our product we could not consent to such an arrangement. 
To this the I. F. C. responded by asking us for additional tonnage to Hamburg 
and Rotterdam. To help them out we booked an additional 900,000 pounds 
ordinary cargo equally divided between Rotterdam and Hamburg. In spite 
of this and our urgent protests they accepted the 17,000 barrels apples for 
direct shipment to Glasgow. Iu meantime all our cargo was enroute to sea¬ 
board and a large portion actually loaded aboard steamer. Then to make mat¬ 
ters worse, the steamer loaded our Rotterdam cargo so that it should be un¬ 
loaded before the Hamburg lot, but as product was similar we were able by 
changing documents to have steamer call Hamburg before going to Rotterdam 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


109 


Originally sailing date was to be January 7, or earlier, and although load¬ 
ing completed January 10 the Guimba did not sail for Glasgow until noon Janu¬ 
ary 17, account it being found necessary repair machinery after loading was 
completed. Then account oil in holers and feed tanks, the Guimba lad to 
put in to Halifax January 24 for repairs so that she eventually arrived Glas¬ 
gow February 15, Hamburg February 24, and Rotterdam February 28—that 
is in contrast to the contract which provided that they should reach Rotterdam 
by February 5—or just about one month behind her schedule. 

In the meantime the market was dropping rapidly. It is difficult to arrive at 
exact figures but we estimate a good 5 cents per pound loss on the frozen 
meats and 14 cents per pound on the lard, making a total of $125,500. 

We certainly feel that steamship companies after making contract should 
not be allowed to jeopardize the interests of their patrons by waiting around 
beyond the contracted sailing date for more cargo, or be allowed to subse¬ 
quently contract for a direct delivery to another port when they had already 
made contract with some other shipper to sail to a specified port. In the inter¬ 
ests of American exporters the Government should take action to regulate this. 

I have here a little circular gotten out in the interests of the 
Eighth National Foreign Trade Convention, in which they say 
that— 

One-fiftli of our industrial and agricultural population depend for their 
livelihood on foreign trade. 

The profits of both farms and factories depend for their maintenance upon 
foreign trade. 

Every man, woman, and child in the United States has a vital personal inter¬ 
est in foreign trade. 

It therefore seems evident that the committee is on the right track 
in endeavoring to solve and to relieve the burdens of that foreign 
trade in so far as possible. 

The statement is so frequently made that this is a risk which can 
be insured; that is, the risk of pilferage and also the risk incident 
upon the undervaluation of a package. The insurance in the case 
of pilferage does not fulfill the need of the buyer. He needs the 
goods; he buys them for a purpose, and in the case of the packing 
industry it is' a food product—it is not a need which can be put off 
indefinitely—and the failure of such shipments, as the one I have 
just quoted, to arrive at destination might make a very serious 
shortage of food at that particular market for the time being. As 
has been pointed out this afternoon, the actual insuring of such losses 
does not in any way minimize the economic loss to the country. In 
fact, if anything, it aggravates it, because there is the overhead of 
the insurance companies to be added to the amount of the loss; and 
the mere fact that they pay the dollars does not save this product to 
the country or to the people—to the shipper or to the consumer. 

The question of concealed loss is, of course, and always lias been 
and always will be a difficult one; and when goods arrive on the other 
side, as I have personally seen them, with the box filled up with sea 
boots, with blocks of wood, with coal from the bunkers, and articles 
of that kind, it seems evident, to me at ieast, that that pilferage did 

not occur ashore. . „ 

I touched briefly a few minutes ago on the increased chance tor 
pilferage through rough handling of the product, of the packages. 
I would like to'go into that a little further and to give you the ex¬ 
perience that I had in Rotterdam late in 1919. I was there when a 
boat was unloading some of the products shipped by mv concern. 
They dropped a net into the hold. That net is 12 to 14 feet square. 
At each corner of that net is a loop, a wire cable in this case, and that 


110 THEFT; ETC.; OF EXPORT AND IMPORT SHIPMENTS. 

is spread out on the floor of the hold. There were four truckers. 
They would come with a box of meat from the four directions so¬ 
ns to put one in on each side of that net and not be in each other s 
way; and they simply came up to the edge of the net and dumped 
each box over in the net. The four corners were then gathered up 
and hooked on to the hoist and as that began to lift these boxes 
were all thrown together to the center of that net. They contained 
between 500 and 600 pounds net and would weigh probably 650 to 
TOO pounds gross of packing-house products—in this case, dried salt 
meats. 

It is impossible in packing those boxes not to have some air space, 
some interstices, because goods do not pack into boxes like bricks 
would, or anything like that. There are spaces that are not filled. 
And as the corner of those boxes would strike either on the top or 
the side of one of the other boxes, they would break through. 

Then the hoist was swung around over the clock, that net was 
lowered to the dock, two of the corners unhooked and the hoist 
picked up, and those boxes spilled out onto the floor of the dock. In 
doing that there was still further breakage; and, naturally, these 
boxes having all been broken, their contents are spilled out more or 
less on the quay. 

Mr. Edmonds. Mr. Herrick, where did the responsibility lay as to 
the handling? 

Mr. Herrick. Nobody seemed to assume the responsibility. 

Mr. Edmonds. Whose duty was it to handle the net; the ship’s? 

Mr. Herrick. That was ship’s tackle. 

Mr. Edmonds. And the emptying of the net was ship’s also? 

Mr. Herrick. Was also ship’s tackle. There is in all of these ship¬ 
ments, as in every case, a sort of “ no man’s land ” where nobody is 
willing to admit liability. In that case I protested to the steamship 
agents and they said, “ Well, as soon as goods leave ship’s tackle our 
delivery has been made.” I said, “ Yes; but you are destroying these 
packages and you are spilling this stuff out and it gets all full of dirt, 
to say nothing of any other loss.” They said, “ Well, that is because 
the packages are not strong enough.” 

Well, 1 submit to you gentlemen it would be impossible to build 
a package strong enough to stand that kind of handling. It can 
not be done. So far as the packing industry is concerned they have, 
all through the war and still do, strive in every way to increase the 
strength of their packages. They are using better materials; they 
are paying more per container for this export stuff than they ever did 
before, except perhaps during the peak of the war, and still we 
are accused of not packing these goods sufficiently well to stand the 
handling. It seems to me it is purely a question of carelessness on 
the part of the carrier, both inland and ocean. The inland carrier is 
not any too careful in removing those goods from the cars to the 
lighter; and then, if they are handled in a net, as in this case, it is 
small wonder that such a percentage of the boxes arrive on the other 
side broken. 

There w^as a further interesting fact in connection with that par¬ 
ticular shipment, and that was I noticed the men working on the 
docks of this warehouse had left their coats about on the piles of 
goods there at convenient places, and as I stood there I saw, time and 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Ill 


time again, a man slip away to his coat. Now, whether that coat con¬ 
tained a ham or a shoulder or a side of bacon when he got ready to 
go home, it seemed to be a matter of entire indifference to everybody 
concerned. It was not to me, because I knew that eventually I should 
have that claim to pay to the customer who received short weight on 
this shipment and a short number of pieces, even though he received, 
perhaps, a full number of boxes. 

In building this export bill of lading, if it may happen that we are 
at least to get a uniform style, which I very much hope we shall, it 
seems that there should be no hiatus at any point in that bill of lading 
where the responsibility of the carriers, either inland or ocean, did not 
cover. It is manifestly impossible for the inland shipper to follow 
those goods through and to take charge of them at every point along 
the route, wherever it may be, to protect them. The only, persons 
that can do that are the carriers. As I said before, there seems to 
be a “ no man’s land ” there that we are not able to cover at the present 
time. The inland carrier says, “ I hold a clean receipt from the 
shipper for the goods.” The ships say, “As soon as they leave our 
tackle and are dropped onto the dock our liability ceases,” and, as I 
have read to you, they disclaim any responsibility for claims that 
are not filed in writing before the removal of the goods—a thing of 
physical impossibility. It seems to me, too, that the period of filing 
claims against the ocean carrier is altogether too short. That six 
months is so easily absorbed by them in correspondence back and 
forth, or by the consignor himself endeavoring to find out just where 
the fault lies. It has been pointed out here, too, that the only people 
who have knowledge of the facts are the people on whom the claim 
would eventually land, and, therefore, they are not at all whiling 
to give any information. And it seems to me we should have the 
privilege of filing suits at least six months after the}^ have been de¬ 
clined by the ocean carrier, instead of six months after the delivery 
of the goods. 

Mention has been made here to-day, also, of the clubs who insure 
the shipowner or operator, and in that connection I presume Mr. 
Loines will be glad to give you a resume of his testimony at that hear¬ 
ing last November. But, at any rate, it brought out the fact that the 
losses paid by those clubs ran from 60 to 75 cents per gross ton per 
annum. By gross ton we understand that probably one-third more 
could be loaded of cargo, so that charge is purely nominal and, of 
course, is so much less than the shipper can secure from any under¬ 
writer. It is my understanding that that covers the claims that the 
steamship people have not been able to absolve themselves from in 
these various clauses in their bills of lading—in other words the $100, 
as has been said here to-day—and if they are thus able to secure 
immunity from all the claims they have not' absolved themselves from, 
for from 60 to 75 cents per gross ton per year, they certainly are not 
standing any considerable portion of the losses suffered by the 
shippers. 

If I might be allowed to suggest to your committee- 

Mr. Edmonds. Is that 60 to 75 cents, Mr. Herrick, on the freight or 
on the package of the shipper ? 

Mr. Herrick. On the package of the shipper—not per trip, but 
per annum. And, of course, to the Far East^ I suppose the boat 


112 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

might make two or three trips a year, and to Great Britain, for ex¬ 
ample, 10 or 12, and to Cuba a correspondingly larger number. So 
that it is purely a nominal burden they are now bearing, although 
they talked a good deal about it. 

If I may be allowed to suggest, it seems to me there should be some 
provision somewhere, by law, that the freight contract shall govern 
the terms of the bill of lading, and not be governed by a bill of lading 
issued subsequent to the receiving of the goods on board of the ocean 
carrier. It is then too late for the shipper to withdraw them. He 
does not know in advance what those terms will be; he can not pro¬ 
tect himself from them and, in many cases, even though he had a 
copy of the printed form of the bill of lading, there are numerous 
rubber stamps affixed at the last moment, with still further exemp¬ 
tions; and I have in mind one bill of lading which carried several 
such rubber stamps. 

Mr. Edmonds. Is there not a joint bill of lading issued now? 

Mr. Herrick. A through bill issued by the inland carrier, the rail¬ 
road? Why, Tve will say, for example, from Chicago to Liverpool, 
the inland carrier issues a through bill of lading; but in that bill 
of lading is a clause “ that this bill of lading is subject to and modi¬ 
fied by all the terms of the bill of lading in use by the steamship 
people at the time the goods are actually on board the steamer.” 

Mr. Edmonds. The shipper never really knows what the terms 
are, then ? 

Mr. Herrick. I have applied for copies of those bills of lading to 
be attached to my freight contract and have been refused. And on 
inquiring why, they said, “ Why, we can not tell w r hat form of bill 
of lading will be in use at the time your goods get to seaboard.” It 
only illustrates the absolute inability, under present conditions, for 
the shipper to find out what sort of death warrant he has accepted. 

Mr. Edmonds. These attorneys down at the seaboard must have 
some business, you know. [Laughter.] 

Mr. Herrick. Well, they have altogether too much. 

Mr. Campbell. He has certainly stated a good case for a lawyer 
there, on delivery. 

Mr. Herrick. So I may say the freight contract should be the gov¬ 
erning feature in the terms of the bill of lading. 

Also, it was proposed at that hearing last fall that the ocean car¬ 
rier be compelled to file a copy of the ocean lading which he proposed 
to use, either with the Interstate Commerce Commission or some other 
governmental agency, and that he should not be allowed to change 
that form except upon a stated notice, possibly 30 days. And in 
changing that, it should be understood that all outstanding contracts 
for freight, previously booked, should be governed by the bill of lad¬ 
ing that was on file with'the governmental agency at the time of the 
booking of the freight. It is customary, especially in our line of busi¬ 
ness, to book that freight for a considerable time ahead. We have 
to do it to reserve space, more especially where it is what we call 
refrigerator space; that is, 35 to 40 degrees, or freezer space, 15 de¬ 
grees or under. A great many of those boats are in the habit of book¬ 
ing their space, practically for the entire summer season, in advance 
Now, then, we should know what sort of a bill of lading’is to o- 0 vern 
the movement of those goods and it should be attached to or* made 
a part of this freight contract. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 113 

Then there was another proposition made, that, in addition to thus 
tiling those bills of lading with the line, it would be of great advantage 
to the inland shipper if, at the various centers like Chicago, St. Louis, 
Kansas City, Omaha, etc., there were branch offices of the Depart¬ 
ment of Commerce and a tile of these bills of lading should be kept 
in those branch offices, so that it would not be necessary for the ship¬ 
per to come to Washington, for example, to find out what sort of a 
contract he had accepted. This is only one of the various schemes 
that weie proposed there to expedite the handling of export business, 
not only on the part of the people who have been in the business for 
a number of years and who, therefore, have a considerable knowledge 
of all that it entails, but more particularly on behalf of the beginner 
who has very little knowledge about these things and perhaps whose 
first experience might be disastrous. 

In these various forms of bills of lading—it would only take your 
time to read them—there are so many exemptions that I doubt if 
anybody in the room can think of one single contingency in the course 
of the transportation, that the ocean carrier has not relieved himself 
from, or declared his lack of liability for. 

Mr. Edmonds. He takes the effort to collect the freight, does he 
not? 

Mr. Herrick. He is absolutely ready and willing to accept that; 
yes. [Laughter.] For example, he goes on to recite that lie shall 
not be liable for the following perils, causes, or things, namely: 

The act of God, enemies, pirates, robbers, theft, or pilferage by 
land or sea and whether by persons in the service of the companies 
or not, vermin, barratry, capture, seizure, embargo, adverse claims, 
restraints of princes, rulers, or people; strikes, lockouts, labor dis¬ 
turbances, trade disputes, whether partial or general, or anything 
done in furtherance thereof, whether carriers be parties thereto or 
not, the action of mobs, effects of climate, heat of holds, steam, smoke, 
sweating, insufficiency of packages in size, strength, or otherwise; 
bursting of packages or consequences arising therefrom, breakage, 
leakage, pilferage, chafage, wastage, rain, spray, rust, oil, frost, 
thaw, floods, decay, hook marks or injury from hooks, stowage or 
contact with, or smell or evaporation from any other goods, or dam¬ 
age from coal or coal dust, leakage or flow of, or* contact with, urine, 
manure, drainage of any animal carried in the said ship, or from 
their stalls, inaccuracies, insufficiency, or absence of marks, numbers, 
or addresses, or description of goods shipped, or misdelivery or loss 
arising therefrom, differences between the marks, or the contents 
of the packages and the description thereof in this bill of lading (the 
alleged marks, numbers, or description in the margin, notwithstand¬ 
ing), injury to or spoiling of apples or packages, loss of weight, de¬ 
tention, delay, literage to or from the vessel, transshipment, landing, 
jettison, explosion, heat, fire on board or on shore, at any time or in 
any place, nor for incorrect delivery, overcarriage, perils or accidents 
of the seas, rivers, and navigation, accident to or defects in boilers, 
machinery, or appurtenances, refrigerating engine or chamber, or 
any part thereof, or in pumps or pipes of any kind, collision, strand¬ 
ing, heeling over, upsetting, submerging, or sinking of ship in harbor, 
river, or at sea, admission of water into the vessel by any cause, and 

60683—21-8 


114 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


whether for the purpose of extinguishing fire or for any other pur¬ 
pose, unseaworthiness or unfitness, at or after the commencement of 
the voyage, or any act or omission, negligence, default, or error in 
the judgment of the pilot, master, mariners, engineers, stevedores, 
workmen, or other persons in the service of the carriers, whether 
on board the said ship, or any other ship belonging to, or chartered 
by them, or in craft or ashore, for whose acts they would otherwise 
be liable, or otherwise howsoever, including mistakes, and interpreta¬ 
tion of, or in exercising or failing to exercise, powers of discretion 
given under this bill of lading. 

Now, if there is anything omitted there, I should be very pleased to 
know what it is. 

Mr. Edmonds. Have they breakage of tackle in there ? 

Mr. Herrick. Well, there 'is “ errors of judgment.” [Laughter.] 
If they make a mistake and throw the goods overboard instead of 
lowering them into the hold of the ship, they are absolutely exempt. 
Then it goes on. Part of it I have read to you before, that the car¬ 
riers shall not be liable for any claim, written notice of which is not 
given before acceptance of the goods. 

Mr. Edmonds. Is that the customary bill of lading ? 

Mr. Herrick. Well, this was taken from the Norwegian line bill 
of lading. They are not very much different, though. These gentle¬ 
men are content to have a little fun with the Norwegian line, but I 
think they might read their own form and find a great deal of this 
right there. [Laughter.] Then it goes on— 

The carriers shall not be liable for loss of market, and all claims 
to be adjusted on the basis of the invoice or declared value of the 
goods, whichever shall be the least. Goods of an inflammable, ex¬ 
plosive, or otherwise dangerous character, shipped without permis¬ 
sion and without full disclosure of their nature, may be seized and 
confiscated or destroyed by the carrier, at any time before delivery, 
without any compensation to the shipper or consignee. Any loss, 
penalty, or damage to the ship or other cargo, direct or consequential, 
or any responsibility whatsoever, shall be recoverable from the ship¬ 
pers, consignees, or owners of the goods. The vessel is not responsible 
for statements of condition, quantity, marks, weight, measure, gauge, 
quality, brand, contents, and value of the goods. In. no case shall the 
carriers be held liable for any inaccuracies or absence of marks 
upon the whole or any number of hides, or other goods, nor for the 
number of horns or bones (if any) shipped under this bill of lading. 

Should it be found on cargo being discharged that goods have been 
landed without marks or having marks different from those on the bill 
of lading, the same shall be apportioned by the master, porter, or re¬ 
ceiver of cargo, to the different lots, and consignees shall conform to 
such allotment. Where bulk goods or goods without marks, or with 
the same marks are shipped to more than one consignee, the con¬ 
signees shall jointly and severalty bear any expense and loss in divid¬ 
ing the parcel into pro rata quantities, and any deficit shall fall upon 
them in such proportion as the carriers may decide. 

That the goods are to be stowed under the main deck, or under the 
spar, shelter, or bridge deck, or poop, or in deck house, or in peak 
at masters' option and shippers’ risk. [Laughter.] 

I want to call your attention that they take shipments of our food 
products, products for human consumption, and reserve the right to 


THEFT, ETC., OF EXPORT' AND IMPORT SHIPMENTS. 115 

ship those anywhere on deck or under deck, or under spar deck, or 
under shelter deck, or on bridge, or in poop, or in deck house, or in 
the peak, at master’s option and at shipper’s risk. 

The consignee shall take delivery of the goods as fast as the steamer 
can deliver immediately the ship is ready to discharge them, failing 
which demurrage shall be paid at the rate of 6 pence per net register 
ton per day of each merchant in default and, at the master’s option, 
the goods to be discharged from the ship as soon as she is ready to 
unload at the wharf or into hulk, lazarette, or hired lighters if neces- 
sary, by day or night, and at the risk and expense of the owners of 
the goods, without the consent of the receivers of the cargo, and any 
expenses, deterioration, loss of goods or packages, to be borne by 
them. The cubage of all measurement goods shall be affected by the 
parties appointed by the carriers, cost of same being borne by the 
consignees of the cargo as customary. The porterage of the delivery 
of the cargo, whether by day or by night, shall be done by the con¬ 
signees of the ship at the expense and risk of the owners of the goods. 
Ihe collector of the port is authorized to grant an order for the dis¬ 
charge of cargo immediately after the arrival of the steamer, and 
should the master or agents require discharge to be made beyond 
the usual customhouse hours, consignees of cargo shall be bound to 
sign immediately an application for this purpose. 

If prevented from discharging by strikes or force majeura, the 
goods may be taken on to the next convenient port for transshipment 
to their destination, or may be retained on board till the ship returns. 

They have now devised a rubber stamp to the effect that in case 
the goods are brought back to the United States, the shipper shall 
pay the return freight. I have in mind a case where a Norwegian 
boat, carrying goods to Christiania, arrived there and found the 
harbor congested, found it would cause a few days’ delay to wait 
to unload at the usual berthing place of the steamer, and so sailed 
out to an island in the harbor there and discharged the goods on that 
island. The Chicago packers learned about it three or four months 
later; they claimed it took all that time to find out where they were, 
and the carrier claimed they were not bound even to give notice as 
to what they had done with the shipment. 

There is another matter which seemed important to us last fall, and 
which was covered, that where delivery was made in consequence of 
quarantine or strikes or riots, or anything of that sort, short of anv- 
. thing named in the bill of lading, that it should be the burden of the 
ocean carrier to give notice to the shipper or consignee of the fact 
where they were delivered. There are cases that could be cited, num¬ 
berless cases, where packing-house products, perishable in nature, have 
been thus discharged into open lighters, or into an open roadstead or 
harbor, simply to save a little time to the boat so that they might thus 
quicker effect her discharge and sail away. That is absolutely a con¬ 
fiscation of the goods, so far as any value of them is concerned, because 
in the open lighters one day, especially at this time of the year and 
with this kind of weather, would cause nearly total loss. 

The changes suggested in the bill of lading were very bitterly ob¬ 
jected to by the shipowners on the basis that this is an old institu¬ 
tion ; that many of these laws have been construed by the court and, 
therefore, the thing was sacred, and we should not change it or touch 


116 THEFT ; ETC. ? OF EXPORT AND IMPORT SHIPMENTS. 

it at all. But they are so manifestly unfair in many cases they are so 
difficult for the ordinary lay exporter, and, perhaps, even an attorney 
to propertly interpret that it seems as if it was time to cut away from 
these ole] phrases that contain words, the use of which has changed in 
the years, until now, perhaps, the very opposite is understood from 
what the courts have construed those clauses to mean. The handling of 
perishable freight, of course, is somewhat different from the handling 
of dead freight in that it can not be discharged into any kind of 
lighter that happens to be at hand, nor on to an open dock, or, as in the 
case of the Norwegian ship referred to, on an island without protec¬ 
tion, and in that connection it might be well to keep in mind the fact 
that shipments of that kind of freight pay a very much higher rate 
than the shipments of dead freight—nonperishable goods; therefore 
they are entitled to receive more care and more consideration. 

The question of insurance, it seems to me, is so closely connected 
with that of the bill of lading that it is absolutely impossible to draw 
any dividing line between them; because on the wording of that bill 
of lading depends absolutely the cost of your insurance. It is now 
practically impossible to get pilferage insurance to some parts of the 
world. The experience of the underwriters has been so unfavorable 
that they decline to accept this or that kind. Then there is another 
important feature that perhaps was not brought out to-day, and that 
is in a great many cases there are goods which the shipper or con¬ 
signor in this country is shipping to his own branch house on the other 
side. 

Now, if the impression prevails that those losses fall on the 
foreigner and therefore that the United States citizen is not con¬ 
cerned with them, that is absolutely erroneous from two stand¬ 
points. In the first place it kills the trade, the foreign trade, of 
the American exporter (it results in the loss of his customers and 
possibly the loss of the market entirety), and, in the second place, 
in a great many cases the United States consignor is also the con¬ 
signee. He is shipping to himself over there, the goods to be sold 
on their arrival there, so that in any case that loss falls inevitably 
on the United States citizen, and, therefore, he is the one who should 
be given the necessary protection and through not only an im¬ 
proved form of bill of lading, a more equitable form, but also, 
as I have stated, before, through the recognition of the freight con¬ 
tract as a part and as a vital part of the bill of lading itself. 

Mr. Edmonds. Who was it that contended in the hearings that, 
that was a “ safe ” bill of lading ? 

Mr. Herrick. Who was it? 

Mr. Edmonds. You said it was contended that this bill of lading 
was “ safe.” Who contended it was “ safe ” ? 

Mr. Herrick. “ Sacred,” that you must not change a word or a 
punctuation mark in it, because it has stood the test of hundreds 
of years of litigation. 

Mr. Edmonds. Who contended that? 

Mr. Herrick. The shipowners. Now, of course, there is another 
feature that perhaps I should not mention outside of the family, 
and that is that there are large packers and there are small packers. 
Small packers find themselves sufficiently handicapped in compet¬ 
ing with the larger concerns in this export business without having 
this added burden put upon them in the way of an inadequate bill 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 117 

of lading—inadequate protection through the bill of lading. I as¬ 
sume that it is of vital interest to the agricultural community the 
country over to see these small packers exist, and that any blow at 
them, therefore, would be a direct blow at the producer of this live 
stock, and that he is entitled and he is interested in this bill of lad¬ 
ing just as much as though he was the actual exporter because the 
difficulties of the exporter are really reflected to him in the market 
for his stock. 

The Harter Act is or was a tremendous help to the exporter. I 
would like to make a suggestion to the committee that that Harter 
Act be given new life at any point where it'may be weak at present. 
Beyond that I would like to see enacted into law a provision that 
no boat, regardless of what flag she flies, should be given her clear¬ 
ance papers unless she first files, with whatever governmental agency 
may be named, the bills of lading under which she proposes to carry 
the goods of the American shipper. 

Second, that they file with the collector of the port a schedule of 
the rates which they received on these various shipments. For ex¬ 
ample, it is not many years ago that one certain line said to the small 
packers, your rate from New York to such a point will be so much; 
if the time comes that you ship more than 5,000 tons in any single 
month your rate will then be 2 cents less. 

Their attention was called to the fact that the small shipper was 
doing his utmost to compete with the big shipper without the added 
handicap of this differential in freight, and the question was asked, 
how did they ever expect the small packer to get to the point of 
shipping 5,000 tons to that port in a single month with the handicap 
at that time that existed of nearly 10 cents in the rate as between 
the small and large shippers. There was no camouflage about that. 
It was frankly stated by the agents of the company that they 
were making the big companies a rate practically 10 cents less than 
they were asking the small packer. Therefore, I think that the 
owners or agents of these vessels should file with the collector of the 
port a schedule of the rates they received on the cargo. That, of 
course, would be after the shipment sailed, but it would enable the 
shippers to know whether they were being undersold by the difference 
in freight rate made to their competitors, especially if their com¬ 
petitors were larger shippers; and certainly the provision that they 
be denied clearance papers unless they agree to file a copy of their 
bill of lading would be no hardship upon them, and the shipper 
would thereby be able to know something about the kind of contract 
he is expected to make, which he does not know now, in many cases, 
until his goods are being brought across. 

I came here poorly prepared. I must apologize to the committee 
and to you gentlemen for rambling through this thing as I have, be¬ 
cause they called me from my summer home, and I had no oppor¬ 
tunity to get this thing into shape as I would like to do and follow 
it logically through. There may be some points that I have not- 
touched upon that I may have "the privilege of reading into the 
record to-morrow, if that is agreeable. I will be glad to answer any 
questions, if there are any. 

Mr. Lehlbach. You have enumerated the various export inter¬ 
ests for whom you are speaking here. Can you give us an idea as 


118 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

to what percentage of the entire export trade of this country you 
are speaking for? 

Mr. Herrick. I am afraid I can not. Of course, the packing in¬ 
dustry is perhaps as large a shipper of export goods in ordinary 
times as any other single industry, and in the Institute of American 
Meat Packers, as members, are every export packer that is in the 
country. The Illinois Manufacturers’ Association also represents 
a very large exporting interest, but I have not any figures. 

Mr. Lehlbach. Can you give us any figures as to the amount of 
losses sustained by any interest, of which you have knowledge, 
through theft, pilferage,‘or nondelivery in exporting goods? 

Mr. Herrick. As to tonnage for a year, do you mean, or port per¬ 
centages ? 

Mr. Lehlbach. Yes; both ways. I would like to get both. 

Mr. Herrick. That, I am afraid, I can not give you. I came here 
right from my country home, and did not have the opportunity to 
get these figures together. 

Mr. Lehlbach. Can you tell us whether losses from these causes 
and nondelivery to consignees, or delivery in a deteriorated condi¬ 
tion, has caused loss of customers and possibly loss of markets to 
American exporters? 

Mr. Herrick. It has. 

Mr. Lehlbach. Can you specify? 

Mr. Herrick. I lost a customer in Norway, in Christiania, that I 
have never been able to get back. I have not been able to convince 
him that the nondelivery of those packages was through no fault of 
the shippers; that the goods were in a good condition when de¬ 
livered to the carrier, and that it was a matter entirely beyond our 
control. That is just one specific case. I have no doubt there are a 
great many others. A great many of those losses—I might say, 
we draw on the customer with documents attached and it is realiy 
his fight then with the carrier to collect the losses, but even though 
it is according to the terms of the contract it reflects right back to 
the shipper and it usually results in the shipper assuming the loss 
or endeavoring to collect it himself, and reimbursing his customer 
in order to hold him. 

Mr. Lehlbach. Do you find that competitors in foreign markets, 
from other countries, are subjected to the same degree of loss and 
to annoyance and loss of freight, through failure to deliver, as 
American shippers? 

Mr. Herrick. I do not think they are to the same degree. They 
have some trouble, but not to the same extent that we do. 

Mr. Lehlbach. Do you think if means can be devised to correct 
this source of loss and failure to meet your customers’ wishes or 
the customers’ wishes, that the nation that first effects such a remedy 
will have the edge on the competitors of other nations? 

Mr. Herrick. Absolutely. 

Mr. Lehlbach. To what degree have your insurance premiums 
that you have had to pay on losses of this kind, theft, pilferage, and 
nondelivery, increased in recent years? 

Mr. Herrick. Tremendously; and in some cases we are absolutely 
unable now to get coverage. That is, it would be at such a pro¬ 
hibitive rate that it could not be considered. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 119 

Mr. Lehlbach. What is the process with regard to filing notice 
when bill of lading demands that such notice be filed before the 
goods are removed from the custody? 

Mr. Herrick. As I attempted to point out, the receiver of the 
goods has no knowledge that there is a claim, except in case of short 
delivery. He has no knowledge that there is a claim until he gets 
possession of the goods; therefore, he can not file his notice before 
the. removal of the goods. It is only after they have been removed 
that he gets possession of them that lie knows the true condition. 

Mr. Lehlbach. Could shippers protect themselves with regard to 
that particular limitation by in every instance filing notice of pos¬ 
sible loss for every possible cause on every shipment they make and 
then on examination of the shipment release those that he finds to be 
in good condition? 

Mr. Herrick. I have advised some of our shippers to do that, but 
they seem loathe to do it because in case they do it they would get 
practically no attention at all when there is a claim. 

Mr. Lehlbach. It is the cry of “ wolf.” 

Mr. Herrick. It is the cry of “wolf” and they would give no 
attention when there is actual loss. 

Mr. Edmonds. I would call your attention to section 17 of the 
original Shipping Board act. The second section says that every 
such carrier and every other person subject to this act shall establish, 
observe, and enforce just and reasonable regulations and practices 
relating to or connected with the receiving, handling, storing, or 
delivery of property. Whenever the board finds that any such 
regulation or practice is unjust or unreasonable it may determine, 
prescribe, and order enforced a just and reasonable regulation or 
practice. 

Have you ever tried to get the Shipping Board to correct any of 
these things ? 

Mr. Herrick. Not to my knowledge. 

Mr. Edmonds. It seems to me that section—I was in the committee 
wdien this was framed—was intended to cover just what you have 
here. Here is a practice that is gradually growing worse and it 
should be corrected. Full authority is evidently given to the Ship¬ 
ping Board, under that section 17 particularly, to order any com¬ 
mon carrier by water, in foreign commerce, as the section is headed, 
to correct any condition of this kind. 

Mr. Herrick. We were so hopeful that that hearing last fall 
would result faborably; that is, bring in an amended form of bill 
of lading that would protect us. 

Mr. Edmonds. I have been informed that under the new board 
there has been some action taken in the matter of starting it. 

Mr. Herrick. We very much hope so. 

Mr. Edmonds. Still at the same time if the complaints were 
brought before the board under that act they would be bound to 
investigate them and give some judgment on the matter. 

Mr. Herrick. The great handicap of the Shipping Board, espe¬ 
cially with the shippers of perishable products, is the fact that they 
have no facilities for docking their boats and unloading their cargo. 

Mr. Edmonds. You are getting the Shipping Board into the posi¬ 
tion of a ship operator. I am talking about the original powers 
given to the board. We do not look upon the Shipping Board as an 


120 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

operating body. We never intended it as an operating company. 
It was started as a regulatory or supervisory body and if we had 
our way it would never have gotten into operating ships. If they 
were not operating ships they would be a body like the Interstate 
Commerce Commission, a supervisory regulatory body, and they 
would be doing the kind of work that that body is doing. Unfor¬ 
tunately, they have gotten into the business of operating ships. 
They never were intended to be ship operators, and we hope to 
goodness they will not be ship operators very long. Those regula¬ 
tory provisions were put in there so as to give them some authority, 
the same as the Interstate Commerce Commission, to correct these 
inequalities, when they existed, if they were harmful to the trade. 

Mr. Herrick. I was saying that more, perhaps, in defense of our 
loyalty to our own flag than anything else. The shipping people 
have been accused of not supporting the Shipping Board, and on 
behalf of the shippers I want to say right here that is very largely 
in the case of perishable freight, because of the fact that those oper¬ 
ators, whoever they may be, have no adequate facilities abroad for 
the discharge of that cargo when the boat gets there. Two years ago 
I went abroad and found a Shipping Board boat carrying cargo that 
we had shipped in June from the packing house. I arrived there 
on the 6tli of August and they were laying in the Mersey and not 
discharged then. 

Mr. Edmonds. We have very expensive agents on the other side 
who were supposed to see that these cargoes were unloaded promptly. 
It costs us a million and a half dollars a year to keep men over there 
trying to get cargoes unloaded. 

Mr. Herrick. Every dock is taken up by the regular occupant 
there, and when any outsider—the Shipping Board or anybody else— 
tries to get space to discharge their boats, especially if he is in com¬ 
petition with the owner of that dock, he has difficulty. 

Mr. Edmonds. Probably it would be just as well if we withdrew 
our men and let the captain take care of it. 

Mr. Herrick. That would be like shipping inland over the Penn¬ 
sylvania Railroad to Chicago if they had no terminals at Chicago. 
They might get there over the rails, they might ride to Chicago, but 
when they got there there would be no facilities and no way to dis¬ 
charge the cargo. I found on the other side, not only in Great 
Britain but on the Continent as well, that those docks are pretty 
much controlled by the regular lines under foreign flags. 

Mr. Edmonds. What did yon find our port stewards and port cap¬ 
tains and port supply agents were doing over there? 

Mr. Herrick. I do not think I found them at all. I found the 
boats lying there full of cargo. Imagine cured hams, for example, 
not smoked but simply cured, shipped from the packing house in 
June and tying in the Mersey River on the 6th of August, under the 
walls of the dock, in just such weather as we are having here now, 
and imagine what thej^ looked like; and some, of these hams did not 
come out of the boat until the 9th of September. 

Mr. Campbell. Did you place that case of delay in the hands of 
a competent admiralty lawyer? 

Mr. Herrick. In that particular case we did not do anything about 
it, because the British Government, as you perhaps know, assumed 
the control of all meats coming into the Kingdom on the 9th of 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 121 

August, 1919; their food administration seized all the goods then in 
the country and in the warehouses, or wherever they were, on docks, 
or in ships, and also seized all the goods as fast as they landed. That 
rather put a different aspect on things so far as the shipper was con¬ 
cerned, because he felt then and still feels that the British Govern¬ 
ment should pay him for those goods. 

Mr. Campbell. That is as far as the shipowner was concerned? 

Mr. Herrick. Yes. 

Mr. Campbell. That alters the case entirely. 

Mr. Herrick. I might say in passing that all those goods were 
seized on the 9th of August, 1919, and many packers have not yet re¬ 
ceived one dollar for those goods. That is a thing that has been 
brought to the attention of the State Department, entirely aside from 
this investigation. 

Mr. Lepilback. It has been suggested that it is very poor policy by 
legislation to limit the right to contract freely by the shipper and 
shipowner, as is the case with other business and commercial interests. 
I believe you have testified not only that you had no opportunity to 
negotiate a contract, but that you were not even permitted to know 
what the contract was until after it has been amended by another one. 
Is that a fact ? 

Mr. Herrick. That is true; yes. 

Mr. Campbell. May I ask one or two questions ? 

Mr. Leillbach. With his consent. 

Mr. Herrick. Let me hear them. 

Mr. Campbell. Do you sell on c. i. f. terms, as a rule? 

Mr. Herrick. As a rule we sell on paid basis. 

Mr. Lehlbach. Do you represent Armour, Swift, and all the large 
packing houses, as well as the small ones in your association ? 

Mr. Herrick. Yes. Freights are made and paid straight. I do not 
think that a large majority of sales are made on goods arriving and 
landed. 

Mr. Campbell. Can you do away with the need of an insurance 
policy on your cargo ? 

Mr. Herrick. An insurance policy of what kind? 

Mr. Campbell. Marine-insurance policy? 

Mr. Herrick. No. 

Mr. Campbell. Do you require them to carry on your transactions 
with the banks that finance those matters ? 

Mr. Herrick. We require them for our own protection. 

Mr. Campbell. Do you require them also for your financing ar¬ 
rangements with the banks ? 

Mr. Herrick. It might be in some cases. In other cases not. 

Mr. Campbell. On all c. i. f. fares they are required? 

Mr. Herrick. According to our contract with the buyer, yes; that 
is what the “ I ” stands for. 

Mr. Campbell. Do you find this in your business: That the insur¬ 
ance policy is essential to the conduct of the business ? 

Mr. Herrick. Marine insurance? 

Mr. Campbell. Yes. 

Mr. Herrick. Yes, sir. 

Mr. Campbell. Are your companies prepared to pay an increase ot 
freight rates for this; that is, the liability that you want to impose on 
the shipowners ? 


122 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Herrick. That is a large question. We are already paying five 
times what we did in prewar days. I do not know whether we are pre¬ 
pared to stand another increase on top of that or not. It must be re¬ 
membered that we have got to compete with the other nations. If for 
any reason it is true, aggregations of figures would show it, that we 
compete with the nations on business in insurance, freight, and cost 
of hogs, for example. 

Mr. Campbell. Can you say whether you are prepared to shoulder 
an increase of freight rates sufficient to absorb the premium ? 

Mr. Herrick. I can not answer that until I know what “ suf¬ 
ficient ” means. 

Mr. Campbell. That is mere quibble, if I may say it, on your 
part. 

Mr. Herrick. All right. Then, perhaps, we had better stop the 
cross-examination, if you feel that way about it. 

Mr. Lehlbach. That ends it. 

STATEMENT OE ME. E. T. BENTLEY. 

Mr. Bentley. I am traffic manager in my private capacity, of the 
Illinois Steel Co., and the Universal Portland Cement Co. In the 
public capacity I am chairman of the bill of lading committee of 
the National Industrial Traffic League. I am a member of the 
traffic committee of the Illinois Manufacturers’ Association and of 
the Illinois District Traffic Association. 

Mr. Lehlbach. Can you tell us the percentage of American ex¬ 
ports that you represent through these various interests? 

Mr. Bentley. Well, representing the individual companies of 
the United States Steel Corporation before the war, we were ex¬ 
porting about 2,500,000 tons of steel products per annum. During 
the war that amount increased very heavily. At the present time it 
has very much decreased with the decrease of business. I do not 
know what the total exports of the company are but I represent 
quite a considerable tonnage. I am here in rather a dual capacity. 
I may say that I have been in the transportation business for 35 
years. At one time I was manager of a line of steamers on the 
Great Lakes and have been an officer of two transportation com¬ 
panies on the Great Lakes. I have been in the exporting business 
all over the world. At the present time our business is handled by 
another subsidiary transportation corporation, and I am not in close 
touch with the details of their business, although they tell me, owing 
to the style and class of business we handle—they have heavy and 
cheap products—that they have very few claims and very little 
trouble. Speaking in a private capacity I have no criticism to offer 
of present conditions on account of that class of business which we 
produce and ship. 

As chairman of the bill of lading committee of the National In¬ 
dustrial Traffic League, I can talk for the league to a certain extent, 
but when it comes to this present proposition, the committee has not 
taken any action and I can only express my personal opinion there. 

I may say that I am the only man in active industrial life who 
has sat around and helped to formulate the railroad bills of lading 
in this country from the inception of the first bill of lading. Prior 
to 1903, there was no such thing as a uniform railroad bill of lad- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 123 

ing. Practically every railroad had its own bill of lading, its own 
terms and conditions in them, and generally elaborated them from 
time to time by inserting some additional clause in the bill of lad¬ 
ing to cure some bad losses incurred by the carrier. The situation 
got so exceptionally aggravating in 1903 that there were two com¬ 
mittees organized by the shippers and railroads to see if we could 
agree on a uniform bill of lading, and I have sat at every conference 
on the railroad bills of lading from that day to this, and I think, 
on that account, they made me chairman of the bill of lading com¬ 
mittee of the traffic league. 

Of that organization I had better state that it is the largest com- 
merical organization of individual shippers in the United States. 
Here is the roster of the organization that I can file with you to 
show^who are members of it. It probably embraces between 400,000 
and 500,000 shippers, having a membership of 1,040 of the principal 
commercial organizations and individual large shippers in the 
United States. It has such concerns as the Boston Chamber of Com¬ 
merce, the Merchants’ Bureau of New York, the Association of 
Commerce of Chicago, and so on (they are all members of that 
organization), so that we have and represent a considerable per¬ 
centage of the United States through it in the manufacturing and 
shipping business. 

I have had in the last few years a great many complaints and a 
great deal of correspondence from members of our organization 
over difficulties on various phases of the bills of lading, both domes¬ 
tic and export. It culminated some time ago in a case before the 
United States Interstate Commerce Commission, docket 4844. After 
the Jones law had passed the Interstate Commerce Commission un¬ 
dertook to promulgate both domestic and export bills of lading. 
They had hearings, and the matter was gone through pretty 
thoroughly, and they got out a form of domestic bill of lading. It 
was fought in the courts by injunction and held up and went to the 
Supreme Court. In the meantime the Jones law came in and the 
Supreme Court held that the case was a moot one and left the issue, 
as to whether or not the Interstate Commerce Commission had au¬ 
thority over an approved bill of lading, undecided. 

The commission held further hearings on that, and it culminated 
in a series of conferences between the shippers, steamship people, 
and railroads, and in the final hearings before the commission last 
November, to which I have referred. That matter is now in the 
hands of Commissioner Hall, who has been working on it since 
that time, and we have had notice that we might expect such a bill; 
but it has not yet come out. I now understand they have some 
doubts as to their authority and are probably waiting for the action 
of this committee before carrying that matter to a conclusion. 

At that time the National Industrial League, after a series of 
conferences with the steamship people, formulated a through export 
bill of lading which we presented fully at the hearing before the 
Interstate Commerce Commission. I can say for the shippers in 
general that what the shipping public want and need is a genuine 
through export bill of lading, rail and ocean from the interior of 
the country to points abroad, as well as a port bill of lading from 
the seaboard over to foreign countries. We have a document that 
they call a through bill of lading, but up to this time we have not 


124 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


needed it. I am informed that it is not a through bill of lad¬ 
ing, but two separate contracts put together for convenience and 
does not really cover the contract as it should. It is decidedly un¬ 
satisfactory to the public to find that when they start their ship¬ 
ments from St. Louis, or St. Paul, or Chicago, or somewhere, to 
London that a question comes up as to the liability of through car¬ 
riage. We have not a through bill of lading. We are in hopes that 
we can get a document that will be clean and fair and enable a man 
in the interior of this country to do proper business without having 
any kind of question as to losses raised. 

The suggestion has been made in the hearings that the small ship¬ 
pers of the country require such a document very much more than the 
large ones. The large shippers have their own people at the ports, 
and many of them, ourselves included, take the port bill of ladings 
rather than take the inland bill of lading. We use the other bill on 
the Pacific coast and some on the Gulf, but not at all on the Atlantic. 
The small shipper, hoAvever, who has not those facilities, must depend 
on the steamship agency or the originating carrier in his home district 
to get him all this information and book him and issue him a bill of 
lading and take care of him generally. 

It is not working satisfactorily, and it does not seem to me that 
there is a great deal of change necessary in the basic law to produce a 
good bill of lading. We have held in this through bill of lading which 
we submitted to the Interstate Commerce Commission, for instance, 
that the contract of coverage should be through, but that the liabili¬ 
ties of the inland carrier and the ocean carrier need not necessarily 
be the same, but that each one should have its own limitations defined, 
and then when the bill of lading is signed it would be a document 
which will carry through to the destination a fair knowledge of what 
the liabilities are, what the charges will be, and that we will have pro¬ 
tection for the full delivery of the property that is shipped. 

Mr. Herrick. Without a hiatus? 

Mr. Bentley. That should folloAv. The interstate commerce law 
prescribes certain liabilities of common carriers, and those liabilities 
under the Interstate Commerce Act will carry to the port generally 
to the ship’s side. If not, they should, and the inland carrier’s liability 
should extend to the ship’s side at the port. In other words, on a 
through consignment from Chicago to Liverpool there should be a 
contract to the port of New York or wherever the transshipping port 
may be. The inland carriers would have full liability up to the time 
it is put alongside of the steamer in its own lighters, and from that 
time on it would be subject to the ocean carrier having its liability to 
the final destination. Of course, there is a different form where a man 
is shipping from a local port and using his own lighter and assumes 
his own risk until he gets alongside of the ship, or wherever the ship 
takes the goods. But on the through bill of lading there should be no 
hiatus; there should be a contract document that will cover through 
without any trouble unless the shipper places his hands on it and in 
some way interferes with the contract of carriage. 

Mr. Leiilbach. Let me ask you a question at this point, if I may ? 
Do you believe a Government may lawfully, either by legislation or 
by delegating that power to an administrative agency, prescribe a 
contract of that sort and forbid the entering into of any other con¬ 
tract not the same in every detail as the one prescribed ? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 125 

Mr. Bentley. I think you can, because you can shut out any foreign 
from this country by your port regulations if you want to. 

Mr. Lehlbach. I mean can you impose such a contract in which 
every detail has been worked out and make it the sole contract that 
our shippers only may enter into ? 

Mr. Bentley. I think you can. 

Mr. Lehlbach. The Harter Act simply prohibits the divesting of 
liability which policy prescribes for the common carrier. It simply 
says they can not divest themselves, but leaves them free, within that 
limit, to make their own contracts. I was just wondering whether 
you think the Government could impose a contract worked out in 
every detail and prohibit the entering into of any other contract ? 

Mr. Edmonds. Is not that exactly what has been done already? 

Mr. Bentley. Yes. 

Mr. Edmonds. That is, by law ? 

Mr. Bentley. Yes. 

Mr. Edmonds. It is what the Interstate Commerce Commission has 
.governmental authority by law to do. 

Mr. Bentley. The Interstate Commerce Commission has the au- 
thority, I think, without question, to prescribe a domestic bill of lad¬ 
ing. 

Mr. Edmonds. A domestic bill of lading? 

Mr. Bentley. If they do not care to prescribe it they may leave it 
to the shippers or carriers to work out in joint agreement. 

Mr. Edmonds. I am very much of the opinion that the Shipping 
Board has authority to supervise rates in regard to the overseas 
traffic. It may be possible that they have not in the way of coast¬ 
wise traffic—that is, outside of the States business that is inter¬ 
state business. But this is in the foreign trade, and I am very 
much of the opinion that a uniform bill of lading recognized by 
the Interstate Commerce Commission, as far as the railroad end is 
concerned, and by the Shipping Board as far as the shipping end 
of it is concerned, could be used and that could be prescribed as the 
only bill of lading of that character that could be issued. 

Mr. Bentley. 1 was coming to that point. I was first speaking of 
the domestic bill which is a bill under the Interstate Commerce Com¬ 
mission. There seems to be some question under the action of Con¬ 
gress as to whether or not the Shipping Board or the Interstate 
Commerce Commission has authority over a joint through bill of 
lading from the interior to the ocean. I think it is fully within the 
power of Congress to designate what those rights and powers may 
be in the bill of lading, and, if they wish any detail, if they care 
to do so, to put up to some body a clean cut proposition to give 
them authority. 

Mr. Edmonds. I will correct my statement by saying that I 
thought the Interstate Commerce 'Commission had the right to 
make a rate coastwise between points within the States, but I am 
not quite sure they have the right. I have talked with Mr. Lissner 
and he said he thought the Shipping Board had supervisory power 
over that also, because the act says so. 

Mr. Bentley. That is where I think there should be further action 
on the part of Congress. There is some difference between the 
shippers and the Interstate Commerce Commission as to what the 
respective rights of those two bodies are. My personal judgment 


126 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

is that the Interstate Commerce Commission should perhaps have 
authority, because it would take away the possibility that the Ship¬ 
ping Board, on account of operating a fleet, might be biased as to 
what might be proper to place on an}^ bill of lading and the Inter¬ 
state Commerce Commission would be left absolutely free. 

Mr. Lehlbach. But would not the experience of the Shipping 
Board as an operator stand it in good stead ? 

Mr. Bentley. The Shipping Board would be a very powerful 
adviser to the Interstate Commerce Commission in a case of that 
kind. However, whichever way you may deem it wise to put it, I 
think it was clearly designed by this statute that either the Shipping 
Board or the Interstate Commerce Commission should have au¬ 
thority. Having as a basis the basic act on which to build the bill 
of lading, then put it in the authority of one of the two bodies to 
prescribe the form of bill of lading and give that body the necessary 
authority to supervise changes in the act or in the bill of lading 
conditions from time to time as conditions might warrant. In 
other words, give them the same leeway the Interstate Commerce 
Commission has to change rules and regulations. That would be 
my theory of it as a personal matter. 

Mr. Lehlbach. You think this power ought to be placed in one or 
the other body. If it were practical or possible to have it, it could 
be joint also? 

Mr. Bentley. It might be w T orked out, but experience seems to 
demonstrate that if you leave it to two bodies you do not get action. 
The Interstate Commerce Commission has authority to put it in 
there for domestic shipments; there is no question of that. There 
is no question but what the Shipping Board has authority over 
exports. The question is whether the Interstate Commerce Com¬ 
mission or the Shipping Board is best fitted to prescribe through 
bills of lading, each one of them having supervision over a part of 
that through movement, and the question of whether the Shipping 
Board would be a permanent institution or not might enter into it. 

I think it is hardly necessary to go over this bill of lading which 
we proposed because at that time there was no question of changing 
the basic law of the Harter Act, which was in effect. Neither the 
Interstate Commerce Commission and the Shipping Board had 
authority to make a change in the law prescribed by Congress. All 
they could do was to administer or interpret the basic law by Con¬ 
gress; so that the work the National Industrial Traffic League did in 
presenting this bill of lading was based on existing conditions at 
that time. If we had the right or authority to have gone into a 
change in the act itself, I will say that the league would have made 
a somewhat different proposition than they made in this form. I 
will leave with the committee this proposed bill of lading, divided 
into sections, as carried under the act at that time. 

Mr. Lehlbach. That will be filed with the committee for its 
examination. 

Mr. Bentley. As regards any change in the basic law, the Harter 
Act, I think, a few very smali changes in the act, and then inter¬ 
preted the way an ordinary man would read English would pretty 
nearly fix this situation. The first clause, article 7237—I am taking 
it direct from Barnes Federal Code, page 1726, reads: 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


127 


Limitation of liability by bill of Jading or other document. —It shall not be 
lawful for tlie manager, agent, master, or owner of any vessel transporting 
meichundise or property from or between ports of the United States and foreign 
pons to insert in any bill of lading or shipping document any clause, covenant, 
or agreement whereby it, he, or they shall be relieved from liability for loss 
or damage— 

I would add before the word “loss,” “the full actual loss or 
damage,” which would bring it in line with the Cummins Act for 
all rail transportation, and clarify that part and make it read “ for 
the full actual loss,” making no change in the balance of the para¬ 
graph excepting to add that “ the burden of proof shall be on the 
carrier” in place of on the shipper. That is also on the domestic 
bill of lading and is the proper place, because the carrier has the 
possession of the facts and the shipper, away off, has no way to 
ascertain them except the carrier is kind enough to give them to him. 
The balance of the article reads: 

from liability for loss or damage arising from negligence, fault, or failure in 
proper loading, stowage, custody, care, or proper delivery of any and all lawful 
merchandise or property committed to its or their charge. Any and all words 
or clauses of such import inserted in bills of lading or shipping receipts shall 
be null and void and of no effect. 

Article 7238 I would not change at all. 

Article 7239 is headed, “ Exceptions to general rule of liability.” 
I would strike out part of the article. It reads this way: 

If the owner of any vessel transporting merchandise or property to or from 
any port in the United States of America shall exercise due diligence to make 
the said vessel in all respects seaworthly and properly manned, equipped and 
supplied, neither the vessel, her owner or owners, agent, or charterers shall 
become or be held responsible for damage or loss resulting from faults or errors 
in navigation or in the management of said vessel— 

I would cut out the words “ in the management of said vessel.” 
1 know of no reason why the management of the vessel should not be 
liable for the property when they should make mistakes especially 
or get careless. They can now hide behind this clause of “ the man¬ 
agement of the vessel ” to deny liability. I do not know of any 
reason why if they damage your goods you should not hold them, 
and wiry the vessel should not be held responsible for damage or loss. 

nor shall the vessel, her owner or owners, charterers, agent, or master be held 
liable for losses arising from dangers of the sea or other navigable waters, 
acts of God. or public enemies, or the inherent defect, quality, or vice of the 
thing carried, or from inefficiency of package— 

I would strike from this clause the words “ inefficiency of package.” 
There is no reason why a carrier should receive freight in poor pack¬ 
ages at all. In the domestic law the carrier has the right to refuse 
to receive freight not properly packed. I believe the law is already 
there, and if it is there, all right. If it is not there, this could well 
come out just the same and let it stand without that. 

or seizure under legal process or for loss resulting from any acts of omission 
of the shipper or owner of the goods, his agent, or representatives, or from 
saving or attempting to save life or property at sea, or from any deviation in 
rendering such service. 

I am informed by others, not of my own knowledge, that that last 
sentence has met with considerable misapprehension. In other words, 
the words “ in rendering such service,” I hold and always have be¬ 
lieved, meant that such services meant only that of attempting to 


128 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


save life or property at sea; but as there seems to be some question 
about it, I would suggest in addition the following words: “such 
service in saving life or property,” so as to absolutely clarify it, if 
that is all that is intended there. 

Mr. Lehlbach. To what do they claim such service refers, if any¬ 
thing, other than saving life or property? t 

Mr. Bentley. I have been told that they admit that is as an excep¬ 
tion to that whole paragraph. It would not hurt to clarify that by 
saying u such service in saving life or property.” That would make 
it absolutely clear and what was intended. 

In the last article, article 7240, coming down to the last document, > 
I will not read it all, “ * * * and such document shall be prima 

facie evidence of the receipt of the merchandise therein described.” 

I would make it read, “ receipt and condition of the merchandise 
therein described.” In other words, if the package is tendered by rail 
to a shipper in apparent good order and a receipt is given, it should 
be given not only for the merchandise but for its apparent condition. 

Then the question of concealed losses comes up. It is the most 
difficult one to handle, possibly, that there is. That is taken care of 
in the rail act. Where concealed loss is located at destination and 
investigation fails to point out on which line transporting it, and you 
can not locate the road on which it happened among the rail carriers, 
the rule is to prorate that loss among all the carriers participating, 
on the basis of the revenue received out of the total. Where you get 
concealed losses on a shipment from St. Louis to New York going 
to London, and it is checked out short at London, due to pilferage 
somewhere en route, and it was in apparent good order at shipside 
in New York City, and investigation fails to locate where the pilfer¬ 
age was done, if you follow the rail practice on losses you would 
prorate from the commencement of shipment to destination, on the 
basis of the earnings received. I do not know of any better plan 
to follow in the case of concealed losses. 

I think that covers my statement. Mr. Chairman, I did not know 
what 1 was coming down here for, and I had no opportunity to pre¬ 
pare. I have learned since I got here, and my talk is from general 
knowledge of the business. 

(The form of bill of lading above referred to was filed with the 
committee.) 

Mr. Lehlbach. Are there any questions that any member of the 
committee, or those sitting with them, desire to ask of Mr. Bentley? 

If not, the committee appreciates your information, Mr. Bentley. 

We will now hear Mr. Burchmore. May I ask, Mr. Burchmore, 
whether you can tell us approximately how much time you desire? 

(The following statement was ordered printed in the record:) 

Illinois Steel Co., 

Chicago , July 26, 1921. 

Mr. Frederick R. Lehlbach, 

House of Representatives, Washington, D. C. 

Dear Sir : With reference to the hearings before your subcommittee last 
week, at which the writer appeared as chairman of the bill of lading committee 
of the National Industrial Traffic League, if not already advised you will prob¬ 
ably be interested in the action taken by the International Chamber o*f Com¬ 
merce on this subject at their meeting in London, England, the last week in 
June. I inclose herewith a copy of the action with reference to marine bills of 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 129 


lading and marine insurance. This was referred to in the hearings with the 
suggestion that the International Chamber of Commerce was a good medium to 
carry out this desirable program. 

Yours, very truly, 

F. T. Bentley, Traffic Manager. 


UNIFICATION OF COMMERCIAL PRACTICE. 

The chamber believes it to be highly important to unify, as far as reasonable, 
feasible diverse commercial practices of different nations when such practices 
are detrimental to commerce, and to that end— 

(a) The chamber directs that a special committee be appointed to take the 
necessary steps to secure the uniform measurement of application of the rules 
for such measurement. 

(&) The chamber expresses its deep interest in the proposition that railroad 
and navigation systems of neighboring maritime countries conclude between 
themselves agreements with the object of placing at the disposal of the shippers 
a bill of lading or other certificate of transportation made out to a specified 
person and covering transport by rail and transport by sea. The national com¬ 
mittees of neighboring maritime countries interested in securing such combined 
land and sea transportation are to take this question up directly with the rail¬ 
way and navigation systems and underwriters in turn with a view to accom¬ 
plishing this result. The chamber is of opinion that the question of insurance 
will require special consideration. 

(c) (1) The International Chamber of Commerce is unanimously in favor of 
obtaining a uniform international ocean bill of lading with appropriate uniform 
clauses for use in special trades and at particular ports. 

(2) A permanent committee shall be appointed by the directors which shall 
cooperate with the International Law Association and the Comite Maritime 
International in their efforts to obtain uniform legislation respecting ocean 
bills of lading. 

(3) Pending the passage of such uniform legislation and following the prece¬ 
dent established on the adoption of the York-Antwerp rules, the said committee 
shall investigate and report to the directors as to the possibility of obtaining a 
general agreement with ocean carriers for the voluntary acceptance by them of 
uniform obligations. 

STATEMENT OF MR. JOHN S. BURCHMORE, REPRESENTING BOR¬ 
DERS, WALTER, BTJRCHMORE & COLLIN, 1623 FIRST NATIONAL 

BANK BUILDING, CHICAGO, ILL. 

Mr. Burchmore. I think it will take me just about five minutes, 
Mr. Chairman. 

Mr. Lehebach. Proceed, then. State whom you represent. 

Mr. Burchmore. I am counsel for the National Industrial Traffic 
League, representing the bill of lading committee with Mr. Bentley. 
I do not want to cover the subject in general at all, but just to make 
one or two special observations that he did not make, and that have 
not been made here to-day. 

I gathered from questions that were addressed by Mr. Campbell 
to the gentlemen to whom they were addressed this afternoon that 
he had in mind perhaps a point that has been discussed somewhat 
among ourselves of—where does this pilfering occur? That is, 
goods are drayed at New York, we will say, down to the steamer 
and are loaded and then unloaded from the steamer at the other 
end, and then taken into the custody of the consignee, and there is a 
concealed loss within the package. Where do these losses occur, 
and is the carrier, the ocean carrier, to be charged with the full re¬ 
sponsibility for that loss which may have occurred while the goods 
were in the possession of the teamster on this side, or which may 

60683—21-9 


130 THEFT ; ETC., OF EXPORT AND IMPORT SHIPMENTS. 

have occurred, perhaps, after they left the carrier’s possession on the 
other side ? 

Now, that seems on the face of it to be a prett}^ big question, to be 
a question that may be of real importance in deciding these matters 
here, and these observations occur to me in connection with it, or in 
reply to it: 

In the first place, you have the precise question arising to-day, or 
likely to arise to-day, on rail transportation in this country; in the 
city of New York a drayman, a carter, takes a box or a number of 
boxes down to the freight station and turns them over to the car¬ 
rier. The carrier does not ope.n those boxes, but places them in 
the car and transports them to the other side of Arizona or Cali¬ 
fornia or Oregon and turns them over to the consignee there. The 
consignee takes them out to his store, opens them up, and finds that 
there are a dozen pairs of shoes missing, or a dozen pairs of some¬ 
thing else missing. Now, you would think, if there was any real 
danger of this question being one of grave hardship to the carrier, 
it would be one that would arise daily and would be one of great em¬ 
barrassment to the railroads, but in our experience it is not so. 

For instance, very recently we had put in our hands by a large 
shipper a claim against some railroads for movement of two or 
three thousand miles of a number of different consignments of goods. 
The first one of these consignments numbered some hundred cases, 
which were drayed down to the station, loaded into a freight car, 
the car was sealed by the carrier, believed to contain the full num¬ 
ber of cases; when it reached the destination point the seals were 
intact. They opened the doors, took out the packages, and found 
that half a dozen packages were missing. 

Now, probably those packages were not removed from the car in 
transit, for the seals were intact. The next shipment was handled in 
the same fashion. The cases were removed at destination, and they 
were all there when taken into consignee’s place of business. A case 
was opened and a dozen boxes of mufflers or silk neckties were miss¬ 
ing from the case. In that case it hardly seems likely that the goods 
were removed while the car was rolling from the point of origin to 
destination. Now, what does the carrier do? The carrier either pays 
that claim, if it is reasonably satisfied that it is responsible for the 
loss, or, as in this particular case, it refuses to pay that claim, where¬ 
upon the shipper brings his suit, and he must establish that the goods 
were not delivered by the carrier at destination, that there was a 
shortage, and as proof that they were delivered to the carrier at the 
point of origin he introduces his bill of lading, which is a receipt for 
those goods. The carrier, however, is not estopped by that bill of lad - 
ing, and if it can show that it did not receive the goods it may neverthe - 
less block the recovery. 

Now, it might be said that in particular cases the carrier might be 
unable to prove that it never received the goods. Well, if that be so, 
it seems to us that all losses that are in fact paid by the railroads in 

the United States—loss and damage claims that are paid by them_ 

they are in the last analysis recompensed for in their freight rates. 
The rates are made high enough to cover the payment of claims, and 
that means not only just claims that are paid, but it means unjust 
claims that are paid, and in that small percentage of cases where the 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


131 


carrier might be held liable unjustly, through goods that it failed to 
receive, nevertheless its freight rates would cover that. 

Ihis very condition that is being suggested seems to be taken ac¬ 
count of m the bill of lading act approved August 19, 1916. (39 

otat. at Large, 538.) This bill of lading act applies in its initial 
paragraph to— 


in 

pi 


Kills oi lading; issued by any common carrier for the transportation of goods 
imy territory of the United States or the District of Columbia, or from a 
ace m a State to a place in a foreign country, shall he subject to this act. 


. Section 20 of that act provides that when goods are loaded by a car¬ 
rier—I am reading the act: 


W hen goods are loaded by a carrier, such carrier shall count the packages 
of goods, if package freight, and ascertain the kind and Quantity of bulk 
freight, and such carrier shall not in such cases insert in the hill of lading 
or in any notice, receipt, contract, or regulation, the words “shipper’s weight, 
load and count,” or other words of like purport, indicating that the goods were 
loaded by shipper and the description of them made by him; or in case of 
bulk freight and freight not concealed by packages, the description made bv 
him. 


Then in section 21 it says: 

When a package of freight or bulk freight is loaded by the shipper and the 
goods are destroyed and the hill of lading merely by a statement of marks 
or labels upon them, or upon packages containing them, or upon a statement 
that the goods are said to he goods of a certain kind or quantity, or in a 
certain condition, or it is stated in the bill of lading that packages are said to 
contain goods of a certain kind or quantity, or in a certain condition, or that 
the contents or condition of the contents of packages are known, or words of 
like purport are contained in this b'U of lading, such statements, if true, shall 
not make liable the carrier issuing the bill of lading, although the goods are 
not of the kind or quantity or in the condition which the marks or labels 
indicate. 

Then over in section 22 we deal with the liability of the carriers. 
The Federal statute deals with the liability of the carrier in these 
words : 


If a hill of lading has been issued by a carrier, or on his behalf by an 
agent or employee, the scope of whose actual or apparent authority includes 
the receiving of goods and issuing bills of lading therefor, for transportation in 
commerce among the several States and with foreign nations, the carrier 
shall be liable to— 

(a) The owner of the goods covered by straight hill of lading, subject to 
existing right of stoppage in transit, or, 

(b) The holder to the bill of lading who has given value in good faith, rely¬ 
ing upon the description therein of the goods, for damages caused by the non- 
receipt by the carrier of all or part of the goods. 

They are made liable for the nonreceipt of the goods, if they give 
out a good clear bill of lading under those circumstances. 

I am only calling attention to that statute as having a direct bear¬ 
ing upon and expression of the very question raised in these ques¬ 
tions of Mr. Campbell, and I think that is a question here before 
your committee. 

Your honor addressed a question to Mr. Herrick as to whether it is 
not poor policy to limit the right to contract, I am one of those 
inland lawyers that he referred to that can only read the terms 
of the bill of lading and tell the shipper that he has got no case. My 
experiences with this matter are second hand. It is what I have 
learned from clients and shippers in regard to their claims. They 


132 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

do not come to us when the shipment goes through safely and in 
good order, but when they get a claim they come to us. We look 
the claim over. If we think they have got a case we send it down to 
one of the seaport lawyers, and he generally writes back, “ Clause 
109 of the bill of lading makes recovery impossible.” And then in 
that connection we learn all that happened. 

Now. you ask whether it is poor policy to limit the right to con¬ 
tract. I have examined a little into that question as a practical 
question, and I ask Mr. Speer, of Morris & Co., when he has a claim 
that the steamer turns down and the lawyer at New York says you 
can’t sue on, because the small type prevents it—I ask him, “Well, 
why did you ship this subject to all those conditions?” Or, “Why 
did you release this stuff to the value of $100 per package ?”—I have 
forgotten just what the release is. He says, “ This is our experience: 
We have a shipment that is so valuable we do not want to limit it 
to $100 per package, and we try to ship it the other way. We wait 
two weeks to try to get a rate from the steamer’s agent, and he can 
not give us a rate, and then we have got to ship, so we ship it under 
the terms of the bill of lading and pay the rate that he does know.” 

It may be poor policy to limit the right to contract, but the 
freedom of contract implies an actual freedom on both sides, and 
the situation is to-day, with the steamers running from the ports in 
this country to foreign ports, that the shipper has got to take a bill 
of lading as offered by them or not ship at all. That is the practical 
situation as they tell it to their lawyers, and that means we are not 
limiting the real right to contract. 

Mr. Lehlbach. Can you tell us whether the steamship companies 
in that particular, with regard to the form of contract, etc., have 
that understanding or act in concert, or have you no knowledge as 
to that? 

Mr. Burchmore. I have no personal knowledge. I only know 
that different concerns that we represent in these matters tell me 
from time to time—not in connection with this investigation at all 
but just in ordinary conversation, educating their lawyer about these 
matters—that they have no real option; that they must accept these 
bills of lading and pay the rate that is the going rate in connection 
with them, or not ship at all, or postpone shipment beyond a reason¬ 
able time. 

That is all I have to say, gentlemen. 

Mr. Lehlbach. It is now 20 minutes after 10, and I understand 
that Mr. Price would be perfectly willing to postpone his statement 
until to-morrow. 

Mr. Price. Yes, sir. 

Mr. Lehlback. Then the committee will stand adjourned until IQl 
o’clock to-morrow morning, to meet in this room. 

Before we adjourn I will make this announcement, that if there 
is anyone present who desires to be heard, who has not submitted 
his name, we will be glad to receive it. 

(Whereupon, at 10.20 o’clock p. m., the committee adjourned 
until 10 o’clock a. m., Tuesday, July 19, 1921.) 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 133 

Subcommittee of the Committee on the 

Merchant Marine and Fisheries, 

House of Representatives, 
Washington^ Tuesday , July 19, 1921. 
The subcommittee met at 10 o’clock a. m., Hon. Frederick R. 
Lehlbach (chairman) presiding. 

Mr. Lehubach. We will hear Mr. Price first this morning. 

STATEMENT OF MR. F. H. PRICE, EXPORT AGENT OF THE MIL¬ 
LERS 1 NATIONAL FEDERATION AND MEMBER OF THE COMMIT¬ 
TEE ON BILLS OF LADING OF THE NATIONAL INDUSTRIAL 
TRAFFIC LEAGUE. 

_ Mr. Price. lam the export agent of the Millers’ National Federa¬ 
tion and also a member of the committee on bills of lading of the 
National Industrial Traffic League. 

Mr. Chairman and gentlemen, this call came while I was traveling, 
and I have not been able to prepare such statistics as I would like to 
have, but I want to point out a curious situation. I telegraphed to 
my office for certain papers I might need. Mr. Bentley picked up 
his file, and we came down here to find that the underwriters and 
ourselves have unconsciously agreed on the same subjects, which I 
think demonstrates there is only one way out of this situation, and 
that is to amend the shipping act. 

The flour millers of the United States have a very special inter¬ 
est in these proceedings, because they were among the first people en¬ 
gaged in the export trade to agitate in a serious way the matter of 
ocean carriers’ responsibility. The point of view which they origi¬ 
nally had and which became incorporated in an act of Congress pro¬ 
posed for them by one of their number, Michael D. Harter, miller, 
of Fostoria, Ohio, and a Member of Congress, was much the same 
as that expressed to-day so ably and concisely by Mr. Rush. They 
had a vital grievance. Their flour was ill used. 

Carriers used bags of flour as a platform on wet and muddy docks 
on which to handle other cargo. Carriers delivered flour to foreign 
buyers in a fearful condition, regardless of brands or marks, and 
denied liability for everything. Their bills of lading contained 
clauses which appeared to protect them. The export flour business 
was in danger of extinction. The Harter Act was drafted and,, as 
drafted, it set out to hold the ocean carrier to a strict accountability, 
but exempting him from liability for damage caused by faults or 
errors of navigation as a reasonable concession. During the debate 
on the bill, or while in conference committee, it was altered. T have 
always believed it was altered surreptitiously. The word “ manage¬ 
ment” was put in with “navigation” and, as enacted, the law con¬ 
tained that insertion. 

Thereafter, it became the practice on occasion for the carrier, 
when sued for negligence, to plead, actually that the master or crew 
had been negligent in the management of the vessel, that the damage 
was caused thereby, and that by law they were permitted to be thus 
negligent. I recall within two years ago, or so, a case of the steamer 
Western Night that sailed from Seattle to a port in the Orient with 
a cargo of tin plate of various sizes and sorts, exported by one of 
the meat packers from Chicago. I saw the file and recollect that it 


134 THEFT, ETC., OF EXPORT AX'D IMPORT SHIPMENTS. 

stated that the master had unshipped his ventilators and that a 
storm occurred and sea water found her way down in large volume 
into the hold of the vessel, damaging the tin plate. My understand¬ 
ing is that the carriers claimed exemption from liability because of 
that negligence in not covering up the traps of the ventilators, and 1 
do not know what the outcome was, but I believe they succeeded in 
their plea. I also have with me a memorandum of a number of such 
cases, which I will transcribe and submit as a part of this record, 
cases where there was gross mismanagement of the -steamer, result¬ 
ing in excessive damage to cargo, and in every case the vessel owners 
made the plea that their master or -crew had been negligent and 
therefore they were entitled to be exempted from liability; which is 
quite the contrary in the case of any other carrier in the country. 

Exporters, our people and those who are members of our National 
Industrial Traffic League, continue to have many serious losses, caused 
by carriers’ negligence, for which carriers are usually able to escape 
liability. These losses are a serious burden on trade and must be re¬ 
moved if American exporters are to develop and expand their foreign 
commerce, which also means the development of our American mer¬ 
chant marine. 

The losses and damages to which I now refer are not covered by 
ordinary policies of marine insurance. Such policies insure against 
the acts of God, force majeur, and the public enemy. Act of God, ac¬ 
cording to our understanding, is a natural catastrophe to which man’s 
negligence is not contributory. But the other losses I have in mind 
are those which result from sweat, generally due to defective ventila¬ 
tion, rain water while loading or discharging, or during lighterage 
engaged by the steamship companies, even though such lighterage is 
to be at the expense and risk of the owner of the goods; damage by 
contact with other goods liable to cause injury; by shifting cargo 
and other losses and damages due to improper or bad stowage. Such 
losses are not covered by ordinary cargo insurance. 

Carriers usually are successful in evading liability for all or most of 
these damages. They accomplish this result by inserting clauses in 
their bills of lading; such clauses as those which limit the amount of 
their liability to a nominal figure, or by those clauses which stipulate 
that claims or notice of claims must be filed in writing at the port of 
destination within an absurdly short period of time. These clauses 
appear to have the sanction of the courts, although the Harter Act 
declares clauses of such import to be invalid. Other clauses, likewise 
prohibited by the Harter Act, but which have no court sanction, are 
inserted for the “ immoral ” effect, to frighten the claimant off, or to 
afford a basis of settlement at something less than the loss. Such 
clauses as these have been read by Mr. McComb and Mr. Herrick and 
need not be repeated here. 

Our object is to sell and deliver flour in foreign markets in good 
order and condition, fit for immediate sale and consumption. I again 
confirm what the underwriters have said, that the insurance does not 
do that for us; it does not help us to develop our markets. The mere 
compensation for loss is unsatisfactory. Export shipments, except in 
special trades, are c. i. f., which is to say that in the case of damages 
and losses occurring from perils not insured against and exempted by 
the bill of lading, are for account of the buyer. But buyers in the 
case of United States Shipping Board steamers find themselves unable 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 135 

to sue the steamer, to libel her, as they may do with regard to the com¬ 
mercial ships of any other nationality. They must bring their claims 
here, in the United States, which is manifestly unreasonable and un¬ 
necessarily difficult. But with respect to all other steamers of other 
flags the collection of claims of that character is almost impossible. 
As the steamship owners stated at the interstate commerce hearings 
a year ago, they pay only about 70 cents per ton per year. This 
amount is far too small to be punitory and less than the cost of effi¬ 
ciency. 

We find ourselves in accord with Mr. Rush and his associates in. 
asking for an amendment to the Harter Act, such as he had suggested, 
whereby the carrier may not limit his liability by any fixed sum, nor 
by fixing an unreasonably short time within which to file claims or to 
bring suit. Further, we ask that the interpolated phrases in the 
Harter Act relating to management be stricken out. We ask no 
amendment to the interstate commerce act and its amendments at this 
time. 

Our shipments travel by through export bills of lading to the sea¬ 
board, or by domestic uniform bills of lading to the port. Under these 
bills of lading we have recourse against the rail carriers for losses oc¬ 
curring by rail and lighter, except those caused by force majeur; but 
in cases where lighterage to or from the steamer is engaged by the 
steamer, even though at the expense and risk of the shipper or owner 
of the goods, then we should be enabled to hold the steamer for losses 
arising from his failure to exercise due care and diligence to see that 
the lighters are seaworthy and properly equipped for the traffic in¬ 
tended. 

During last year I was in the port of Habana in connection with 
the congestion of rice shipments at that port. Almost every steamer 
we examined discharged her cargo into lighters. It was, of course, an 
unusual situation, resulting in congestion and resulting in lighters 
being held loaded for several weeks or even months before they could 
be discharged. It was a rainy season and it rained every day, very 
heavily, indeed; and yet no care was taken by the steamship agents 
to fcee that these lighters or many of them were covered by tar¬ 
paulins. They hired the lighters; the merchants had nothing to do 
with them except to pay the expense when the bill came to them from 
the steamship company. They, the merchants, could take no steps of 
their own to secure protection. The rice became damaged to. a point 
wdiere the losses have caused great embarrassment to these rice mer¬ 
chants, and they have yet no recourse against either the carrier or 
the underwriter; but I believe they will bring claims against the 
carriers. 

We make the same contention with respect to any damages and 
losses occurring while the property is being carried by a connecting 
carrier to a destination beyond the destination of the contracting 
steamer. The only contract that we have is the bill of lading signed 
by the master or agent of the contracting steamer. We may be safe¬ 
guarded up to the limit of our laws with respect to the contract with 
the contracting steamer, and we may have no rights worth anything 
against the connecting carrier. We contend that our contracting 
carrier should make a contract with a responsible connecting carrier 
which will preserve to us our original rights and that we should 
look to our contracting carrier for our full reimbursement, he having 


136 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

his recourse against his connection under his contract. We do not 
say, however, that the contracting carrier should be compelled to 
carry beyond his linebut if he does he should preserve to us our 
original rights under the contract he makes with his connection. 

We contend with respect to all losses and damages, except those 
caused by the act of God and the public enemy, that the ocean carrier 
should be an insurer to the extent of the cargo owner’s full actual 
loss, except for losses due to force majeur. In other words, we ask 
that the same measure of damages and degree of extent of liability 
imposed on rail carriers by the amendments to the interstate com¬ 
merce act should be applied to the ocean carrier. 

For that purpose we ask for another amendment to the Harter Act, 
to the effect that the damaged condition of cargo at the place of final 
destination shall be prima facie evidence of negligence, and the bur¬ 
den to prove freedom from liability to be upon the contracting 
carrier. 

There is a definite and well-defined field for marine insurance. It 
may cover from shipper’s warehouse in the interior or at the sea¬ 
board to consignee’s warehouse at the port of foreign destination, 
or in the interior, by rail and steamer, against the act of God or the 
public enemy. By act of God is understood a catastrophe to which 
the negligence of the carrier is not contributory. Thus, while on 
the rails a cloudburst may cause a flood, destroying or damaging 
property; or the lighter or steamer may sink or strand because of a 
storm in the harbor or at sea; and in addition to which two disasters 
it is customary and proper to include collision and fire. The inclu¬ 
sion of rail and lighterage risks is on the same condition as thq 
steamer insurance. Beyond that field it is not wise for underwriters 
to go, in our opinion, except in those special trades in which the 
marine underwriters by a special arrangement, as an aid to exporters 
in the development of special trades, to acquire the rights of cargo 
owners and hold the carriers to the same strict accountability as the 
shippers themselves would otherwise do. 

But we must be fully protected. We are not to be blamed for buy¬ 
ing it from the underwriters in the absence of legal rights against 
the carriers. We know that by buying insurance against all sorts 
of risks of transportation we have weakened our commercial position 
as competitors in the world’s markets. We have, in effect, but only 
recently realized it, aided and abetted the ocean carriers in adopting 
and securing their present privileged position. 

We have given our time and energy to securing proper control of 
the rail carriers and, in the meanwhile, the ocean carriers have got 
out of hand, and the United States courts appear to have aided them. 
Now we have to ask the Congress for the same assistance it has given 
us with respect'to interstate commerce, and I beg to recapitulate the 
items of our petition, namely: First, we want the carriers liable for 
our full actual loss; second, a reasonably long time to present and sue 
on claims; third, we desire the omission of faults of management 
from the Harter Act; fourth, we desire that the liability of the car¬ 
rier shall extend to the final delivery, by lighter or by connecting 
steamer; and fifth, the burden of disproving liability to be on the 
carrier. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 137 

Finally, we ask an amendment to the present shipping act, whereby 
it is possible for foreign claimants to attach United States Shipping 
Board boats in foreign ports. 

The law of England, as exemplified by the Corinthian case (Craw¬ 
ford & Law v. Allan Line. House of Lords), holds the ocean carrier 
to a strict accountability for noting damages at time of receipt, as 
was the intention of our Harter Act. Consequently, we are asking 
nothing new or untried when we ask these amendments to the Harter 
Act. Our experience is that the only way we can successfully have 
our exports policed and guarded from damage in transit is to pro¬ 
cure the full enforcement of carrier’s legal liability. 

Apart from that question we have another matter to bring before 
your committee which relates to the difficulties experienced by our 
importers in taking delivery at foreign ports. It appears that cer¬ 
tain United States Shipping Board steamers have been advertised to 
sail on stipulated fixed dates. Contractments of affreightment were 
made accordingly. The steamers either did not sail or were delayed, 
resulting in suits against shippers for nonfulfilment of contract to 
ship in the time stipulated. The consignees have suffered serious 
loss of profit and market, and have written to our headquarters in 
Chicago asking us to procure changes in bills of lading which will 
prevent such occurrences in the future. I submit copies of these 
letters herewith, and at the same time I ask you to adopt the sug¬ 
gestions they make as to receipt on board. 

We ask for one uniform bill of lading as to all liability clauses, 
to be in strict conformity with the Harter Act as amended. Each 
carrier will, of course, add special delivery clauses required for 
special routes. We ask that there be set up a proper authority to 
prescribe the form and substance of these liability clauses, in order 
that there may not be inserted in bills of lading any threat clauses 
or clauses meant to intimidate the shipping public. The bill of 
lading act, known as the Pomerene bill, governs the matter of receipt 
and fixes the status of concealed losses, such as pilferage, and affects 
both ocean and inland carriers. Consequently there should be no 
difficulty in arriving at substantial uniformity after the Harter Act 
has been amended as has been suggested. As to liability for loss 
and damage, the carriers may set up the bugaboo of increased freight 
charges; but our experience’with carriers is that that matter adjusts 
itself. I do not believe, with all the figures that the underwriters 
have brought before us, that the total tax on the exporters of this 
countrv would amount to a fifth of 1 per cent. It is too small a 
matter" to consider as an argument for advancing any freight rates. 
Competition will regulate freights, and the cost of negligence will 
force the carriers to efficiency, thereby preventing a large measure 
of loss and damage, which will be exactly what the export trade 
requires and demands. 

I have the letters from the National Association of Flour Importers 
to which I referred, which, if the chairman would like to have done, 
can be read. They relate to the things which I have spoken of, of the 
failure of steamers to leave on the dates advertised, resulting in loss 
of profits and markets, which ought to be guarded against by a 
proper clause in the bill of lading. 

Mr. Lehlbach. The committee will be glad to have them read, 

Mr. Price. 


138 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Pi hce. This is a letter from the secretary of the London Flour 
Trade Association: 

The present bills of lading issued for sacked goods in the United States of 
America and Canada are in many ways unsatisfactory and the London Flour 
Trade Association now lias the whole subject under consideration. 

The first steps taken must he to insure that ocean hills of lading are cor¬ 
rectly dated, i. e., dated with precision and neither antidated or postdated. 

Many instances given to the association prove that goods are often placed 
upon vessels at dates other than those given upon the hills of lading. 

My association requests the Millers’ National Federation to immediately ap¬ 
proach all steamship lines and obtain written assurances that for the future 
the date given upon every ocean bill of lading shall be the exact date of the 
goods being actually and finally upon the vessel stated in the bill of lading. 

This action is necessary in the interests of the exporting millers as well as 
the importers this side. Careless dating of documents will inevitably result in 
serious losses and complication. 

When bills of lading are worded “ received to be transported by ” or some 
such similar phraseology, this should not affect the fact that the date given 
upon the document must be the date when the goods were actually placed upon 
the vessel. To argue otherwise is to turn a bill of lading into a mere dock 
receipt. 

The steamship lines are and must be aware when goods are actually loaded 
into vessels. Further, it has been stated that in practice b'lls of lading are not 
given up to the shipper till the goods are on board, therefore there does not 
appear any difficulty in the way of correct dating. 

In view of the possdulity of serious price fluctuations in the near future, the 
Millers’ National Federation will he well advised to get the matter put right 
immediately. 

The simple issue is that a bill of lading must be what if. purports to be. An 
ocean bill of lading must give the goods as loaded upon the steamer named on 
the bill of lading and also the exact date when the goods were actually and 
finally placed on board. 

My association is convinced that the Millers’National Federation will readily 
see that a bill of lading is a document of primary importance, and it is vital 
that carelessness in dating shall not be permitted. 

Mr. Gaines. May I ask a question? I did not hear the first part 
of the letter. Was the complaint there made of both Canadian and 
American shipping? 

Mr. Price. Yes, sir. But the claims that were discussed chiefly 
arose from steamers, I think, from Philadelphia, of the Shipping 
Board, which did not sail on the dates advertised and the flour did 
not leave this country for several weeks after the fixed advertised 
dates. When the flour arrived in London, the market had declined 
so radically that it could not be sold at anything like the price it 
was bought for; and as a result suits were brought against the ship¬ 
pers by the consignees, because of their failure to ship in time. 

Mr. Edmonds. What line was that? 

Mr. Price. I do not know the name of the line; I will have to look 
up my records to get the steamers’ names. They began with the 
word “ West.” There were two or three of them. 

Mr. Edmonds. Two or three steamers? 

Mr. Price. Two or three steamers; yes, sir. 

Mr. Edmonds. They belonged to the International Freighting Co., 
I suppose? 

Mr. Price. I do not know, sir, the name at the present moment. 
I do not know the exact date, of course. 

Mr. Edmonds. I just want to say it was not a Philadelphia con¬ 
cern, because we always ship right on the date. [Laughter.] It was 
probably a Yew York steamer down there getting a load. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 139 

Mr. Price. No, sir. I would like to be able to agree with you, but 
I recollect in this particular instance there were more than this one 
I speak of; but I can not remember the steamer’s name, but it was 
a Philadelphia steamer. 

Mr. Edmonds. It was not a Philadelphia steamer; it may have 
been built in Philadelphia and allocated, probably, to a New York 
operator, because Philadelphia steamers operate right on the date. 
[Laughter.] 

Mr. Price. What we say is if the steamer is booked to sail, say, the 
last of May, or the last of the month, she should sail in that month 
and not beyond that month. 

I believe that completes my notes, gentlemen. 

Mr. Gaines. May I ask another question. Mr. Herrick put in the 
record, yesterday, a very interesting Norway bill of lading; have 
you the English bills of lading that you could hie, for comparison 
with the American and Norwegian bills of lading that we have been 
furnished ? 

Mr. Price. I have not, but I think I can procure a series of 
foreign bills, English bills of lading, if they are wanted by this 
committee. 

Mr. Edmonds. I would like to have, as near as possible, all of the 
bills of lading that you can possibly get of the different lines, both 
of the foreign lines and the American lines, so that they may be 
inserted in the hearings. 

Mr. Price. I will be glad to supply you, at the earliest possible 
date, with a series of bills of lading issued in Great Britain and by 
various lines, privately owned, as well as Government owned, in 
this country. 

Mr. Edmonds. You will get those for us? 

Mr. Price. Yes, sir. 

Mr. Gaines. Do the English shipowners use a uniform bill of 
lading? 

Mr Price. No; I do not think they do; I do not think there is a 
uniform bill of lading in England. 

Mr. Gaines. What I wanted to get at was whether the uniform 
bill of lading that you mention as desirable to be required of Ameri¬ 
can shipowners by* law, was required by the laws of other compet¬ 
ing countries. 

Mr. Price. I do not think so, sir. We do not ask that the ocean 
bill of lading should be absolutely uniform in all respects, but only 
as regards those liability clauses which are necessary in connection 
with the legislation we have. 

Mr. Gaines. Yes. Well, are the other foreign bills of lading uni¬ 
form in that respect ? 

Mr. Price. I do not know, sir; I have never examined them with 
that purpose in view. 

Mr. Gaines. Do you know whether the foreign laws make such 
requirements as you wish now to have made by the amendment 
which you propose to the Harter Act? 

Mr. Price. No, sir; I do not know. I ask that uniformity because 
we have it with respect to our inland transportation and we would 
like it with respect to our ocean transportation. 

Mr. Gaines. Yes; I know; but the railroad uniform bills of lad¬ 
ing in this country are not tied up with foreign competition. What 


140 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


I wish to know is whether there is such a uniformity in bills of lad¬ 
ing in connection with ocean shipping in other countries, as you de¬ 
sire to be required in this country, by law ? 

Mr. Price. I do not know, sir. 

Mr. Edmonds. The amendment of the Harter Act would not neces¬ 
sarily mean a uniform bill of lading? 

Mr. Price. No, sir. 

Mr. Edmonds. An ordinary amendment to the Harter Act, re¬ 
quiring the steamship owners to accept their liability, would not 
mean a uniform bill of lading. 

Mr. Price. Exactly. 

Mr. Edmonds. The question of a uniform bill of lading and an 
amendment of the Harter Act are two entirely separate subjects. 

Mr. Price. Yes, sir. 

Mr. Lehlbach. As the -witness says, one is a complement of the 
other; that, having such legislation—an amended Harter Act—that 
the bills of lading should be uniform in so far as they apply to the 
assumption of liability by the carrier in conformity with the 
amended law? 

Mr. Price. Yes, sir. But with respect to other matters of traffic, 
delivery, and all those sorts of things, which are varied by the routes 
by which steamers sail, or the ports to which they go, those matters 
would be left to the carriers to fix for themselves. As a matter of fact, 
I might say that there seems to be a certain amount of uniformity 
under bills of lading. They all seem to refer to the same general 
average clause, for instance; they seem to conform with regard to 
those things for which they are not responsible, like act of God, public 
enemy, etc. I only ask that they supplement that uniformity by hav¬ 
ing it apply to their liabilities imposed upon them by the legislation. 

Mr. Edmonds. I think my friend, Mr. Campbell, drew such a good 
bill of lading for liberality that they all copied it. [Laughter.] 

Mr. Gaines. What I was trying to get at was whether there was 
any other country—for instance, Great Britain, Norway, and Franee— 
where such a requirement was made on their shipping as you desire to 
be enacted into law in this country for American ships. 

Mr. Price. I do not know anything about it, sir; but I imagine there 
is no such requirement in foreign laws. 

Mr. Lehlbach. We will now hear from Mr. Downes, of the Ameri¬ 
can Manufacturers- Export Association. 

Mr. Price. May I say one more word, please, at the request of my 
chairman ? 

Mr. Lehlbach. Yes. 

Mr. Price. If we had this uniformity for which we ask, we could 
no doubt rely upon the machinery of the International Chamber of 
Commerce to secure uniformity in foreign countries along the same 
lines. There is no reason why we should not institute a reform in this 
country which may set the pace for other countries to follow. 

(The letters submitted by Mr. Price are as follows:) 

National Association of Flour Importers, 

20, By ward Street, London, E. C. 3. 
Secretary Millers’ National Federation, 

Chicago, III. 

Re ocean bills of lading. 

Dear Sir: In February last my association forwarded you a letter from the 
London Flour Trade Association of which a copy is now inclosed. 


141 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


You will see that the crux of the matter is that over here whatever form 
'of B/L is used, a B/L should only he dated when the goods are actually on 
hoard. If in the United States of America you could insist upon this rule be¬ 
ing strictly carried out many troubles will automatically disappear. It would, 
for instance, be impossible for a merchant here to receive an ocean B/L for 
flour and the steamer named in such a document not to carry the flour at all. 
I need scarcely point out to you this lias a bearing not only upon the time of 
shipment but the marine insurance and is altogether satisfactory. 

We quite understand that there may be certain difficulties which you have 
to encounter when selling for seaboard shipment, but these difficulties seem 
to be easily overcome by nn exporter who sells wheat for a definite seaboard 
shipment. Bills of lading for wheat are dated always when cargo is actually 
on board the export steamer. 

I do not think that nowadays the feeling of an American miller is that 
having handed the goods over to a steamship line in good time the liability 
on the part of the miller is ended. 

Somehow steamship lines must be made to live up to their engagements. 
Should a steamship line not be able with safety to undertake first half of June 
loading, then it should contract for, say, all June. What is the use of a con¬ 
tract at all unless such a contract is carried out? The present system makes 
it quite possible for a steamship line to accept space at a premium rate and 
then calmly defer the original booking. 

I feel firmly that this subject must be thrashed out. l r ou will, of course, at 
once understand we do not wish to press difficult conditions upon American 
millers, because, as a matter of fact, we are very anxious to assist them. 

Technically, as things stand at present, all goods which are not on board 
vessels within contract time are defaults on the part of the shippers. 

If the Millers’ National Federation will please at once get to work upon the 
matter, doubtless between the two associations we can get seaboard shipments 
placed upon a sounder basis, and everybody concerned, including all the steam¬ 
ship lines, must ultimately greatly benefit by engagements being carried 
through. 

It is imperative that wheat does not get a sound freight contract, while 
flour gets a loose one. 

You will realize how important it is that the American milling interests 
obtain exact shipments. In the past, United States flour has suffered severely 
this side through lack of continuity in supplies. 

After the federation has tackled the matter, please report progress as soon 
ns you conveniently can. 

I remain, dear sir, 

Yours, very truly, 


Robt. C. Henderson, Secretary. 


London Flour Trade Association, 

Corn Exchange, 
London, February 2, 1921. 

Secretary Millers’ National Federation, 

Chicago, III. 

Dear Sir: The present bills of lading issued for sacked goods in the United 
States of America and Canada are in many ways unsatisfactory, and the London 
Flour Trade Association now has the whole subject under consideration. 

The first steps taken must be to insure that ocean bills of lading are correctly 
•dated, i. e., dated with precision and neither antidated or postdated. 

Many instances given to the association prove that goods are often placed 
upon vessels at dates other than those given upon the bills of lading. 

My association requests the Millers’ National Federation to immediately ap¬ 
proach all steamship lines and obtain written assurances that for the future the 
date given upon every ocean bill of lading shall be the exact date of the goods 
being actually and finally upon the vessel stated in the bill of lading. 

This action is necessary in the interests of the exporting millers as well as the 
importers this side. Careless dating of documents will inevitably result in 
•serious losses and complication. 

When bills of lading are worded “ Received to be transported by ” or some 
such similar phraseology this should not affect the fact that the date given upon 
the document must be the date when the goods were actually placed upon the 
vessel. To argue otherwise is to turn a bill of lading into a mere dock receipt. 



142 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

The steamship lines are and must lie aware when goods are actually loaded 
into vessels. Further it has been stated that in practice bills of lading are not 
given up to the shipper till the goods are on board; therefore there does not 
appear any difficulty in the way of corrective dating. 

In view of the possibility of serious price fluctuations in the near future, the 
Millers’ National Federation will be well advised to get the matter put right 
immediately. 

The simple issue is that a bill of lading must be what it purports to be. An 
ocean bill of lading must give the goods as loaded upon the steamer named on the 
bill of lading and also the exact date when the goods were actually and finally 
placed on board. 

My association is convinced that the Millers’ National Federation will readily 
see that a bill of lading is a document of primary importance, and it is vital that 
carelessness in dating shall not be permitted. 

Yours, faithfully, 

.T. H. Pillman, Secretary. 

11 Hart Street, 

Mark Lane, London, E. C. 


National Association of Flour Importers, 

London, E. C. 3, July 1321. 

Secretary Millers’ National Federation, 

Chicoyo, 111. 

Dear Sir: I shall be glad if you will bring this letter before your president. 

At a recent meeting of the council of this association a very full discussion 
took place respecting shipments by the American Shipping Board steamers, and 
1 was requested to put the subject to you in order that the matter could be 
dealt with through the Millers’ National Federation. 

At present there are certain features connected with shipments by vessels of 
the American Shipping Board, which do not ipeet with the approval of the ' 
United K ngdom imported flour trade. 

My council feel that the American Sli pping Board itself is anxious that its 
services should be of the highest quality and will therefore give every attention 
to our expressions of friendly criticism conveyed through the Millers’ National 
Federation. 

The Glasgow delegates gave many examples to prove that an undue period 
elaspsed between the time of bill of lading date and actual arrival in Glasgow. 

A certain amount of this delay has arisen from vessels touching at several ports 
both sides en route. I am sending you a list giving six examples of delay, fur¬ 
nished by the Glasgow Flour Trade Association. 

It would also appear that the stowage of flour has been somewhat careless— 
too many parcels do not arrive in good condition—sweat and also oil taint have 
been very noticeable. 

The London delegates raised the point that London clause charges (i. e., land¬ 
ing on the quay and sorting and then delivering from dock quays to barges) 
were demanded although goods were delivered overside, charges demanded and 
no services rendered. 

My association desires to put the matter very frankly to you ; the general im¬ 
pression of all ports is that the agents for the board assume too autocratic an 
attitude generally, and the suggestion is made that the American Shipping 
Board should instruct its agents this side that every assistance and consideration 
must be accorded to imported flour. 

Will you kindly have the above matters thoroughly looked into and advise me 
at the earliest possible date what improvements my association may expect in 
the near future. 

Would it not be advisable for the American Shipping Board to have one fixed 
agent, fully conversant with the handling of flour in every United Kingdom 
port? 

, I am convinced that our criticism will be welcomed and dealt with to the 
benefit of everyone concerned. 

I am, dear sir, 

Yours, very truly, 


Robert C. Henderson, Secretary. 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


143 


National Association of Flour Importers, 

^ London, E. C. 3, July 1921. 

Dear Mr. Husband : I feel that the bill of lading question will cause a lot of 
trouble one day unless put into good shape. • 

the problem! 6 C ° Vere<1 in the contract between seller and buyer and do not affect 

Kind regards to you personally, 

Yours, sincerely, 

Frank T. Collins. 

Above letter accompanied by the following: 

June, 1021. 

clauses. 


Cunard Line: “ Or failing shipment in whole or in part by the said ship, then 
in and upon other ships of the same line.” 

Bristol City Line: “Or failing shipment by said steamer in and upon a fol¬ 
lowing steamer.” 

White Star Line: “ Or failing shipment by said steamer in and upon a following 
steamer.” ■ 


Canadian Pacific Ocean services: “Or other ship or ships sailing from the 
port of.” 

The Winchester Line: “Or failing shipment by said steamsh'p in and upon 
following steamships.” 

The above clauses would lie all corrected by bills of lading being only dated 
when goods are finally and actually on board a vessel. 

These clauses seem on a par with a $100 bill “ and/or other smaller amount 
than the sum shown on the face hereof.” When is a bill of lading not a bill of 
lading? When it is a dock receipt. 


F. H. Price & Co 
New York. August 1, 

Hon. Frederick K. Lehlbach, 

Chairman Subcommittee on Marine Insurance, 

Committee on Merchant Marine and Fisheries, 

House of Representatives. 


1921. 



Dear Sir : Responding to the request of your committee on the hearings oil 
July 18. 19, and 20, we inclose herewith a statement of a number of law cases, 
showing that loss was sustained by cargo owners by reason of faults and 
errors of the master or crew in the management of the vessel. These are old 
cases, and if necessary, with some considerable trouble, we might produce it 
list of additional cases of more recent date. In fact, I am endeavoring to 
prepare such a list in the event and will forward it to you in due course. 

We are also endeavoring to obtain a complete file of forms of steamship bills 
of lading. These will come to hand shortly from various ports and we will 
forward them to you at that time. 

I also beg to file with your committee the inclosed copy of an article which 
I prepared for one of our western traffic publications. 

Very truly, yours, 


F. H. Price. 


statement of law cases. ' 

f ’ 

Steamship “Silvia ” (171 U. S., 462).—Steamer sailed with a porthole in 
her between decks unsecured. Water entered, damaging her cargo. Held by 
the court that the porthole being open during the voyage was a “ fault or 
error in the management of the vessel.” within the meaning of the third section 
of the Harter Act, and the decision was in favor of the vessel. 

Steamship “ Sarndfield ” (79 F. R., 371, affd. 92 F. R., 663). —The opening of 
a shu'ce gate to empty the bilges was neglected for 20 days during heavy 
weather. Bilges overflowed and the water damaged the cargo. Held by the 
court that neglect to open the sluice gate was neglect in the “management of 
the vessel,” within the meaning of section 3 of the Harter Act, and owners 
were exempted from liability thereby. * 

' ■ ' * ' ‘ ■ ‘. unco 






144 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Steamship “ Mexican Prince ” (82 F. R., 484, affd. 91, F. R., 1003).—Steamer 
was a convertible-tank ship built to carry both fluids and dry cargo. Each 
compartment was connected with a pipe line by a Kingston valve operated from 
the deck. Ship sailed from Rio with No. 2 tank full of ballast water and the 
other tanks full of coffee in bags. After leaving Rio the ballast water was 
pumped out through the pipe line, but the valve in No. 3 tank was not closed 
and the coffee in that tank was damaged by ballast water. Those in charge 
failed to properly test valves, a very simple operation. Held by the court that 
the damage to the coffee arose from neglect in the “ management of the ves¬ 
sel,” within the meaning of the third section of the Harter Act, and that the 
ship was not responsible therefor. 

Steamship “ British King ” (89 F. R. 872, affd. 92 F. R.. 1018).—The cargo 
was damaged by water from a ballast tank which was found sprung and the 
rivets started after heavy weather. Held by the court that the failure to take 
soundings and to apply the pumps, as the known facts showed to be neces¬ 
sary, was, therefore, the final and immediate cause of the damage, but for this 
negligence the ship and owners are not liable, under the third section of the 
Harter Act, because it was negligence in the “ management of the ship.” 

Steamship “ Merida ” (107 F. R., 146).—Hides were damaged by an accumula¬ 
tion of water in the bilges, due to a failure to use the pumps. Held, by the 
court that failure to use the pumps was a fault in the management of the 
vessel, and the vessel was exonerated. 

American Sugar Refining Co. v. Rickerson (124 F. R., 188).—Cargo was dam¬ 
aged by water entering the hold through a manhole in a ballast tank. Shortly 
after sailing the sea cock was opened for the purpose of filling the ballast tank 
and negligently left open for 7$ hours. Resulting pressure blew out the packing 
of the manhole joint. Held by the court to be negligence in the management 
of the vessel and the owner not liable. 

Steamship “ Wildcroft ” (130 F. R., 521; 201 U. S., 378).—While the steamer 
was discharging a cargo of sugar in Philadelphia she took in water for her 
boilers thorugh a pipe line running to the engine-room tank. A valve connected 
to a pipe in this line was used to pump out her bilges. The sugar was badly 
damaged by water. Found by the court that the presence of such water could 
only be accounted for by the valve connecting the pipe leading to the engine-room 
tank and the pipe leading to the hold having been partly open, due to clogging 
by some foreign substance, having lodged when bilges were last pumped. Fail¬ 
ure to see that this valve was properly closed was a fault in the management 
of the vessel and under the Harter Act the vessel was exempted from liability 
for such fault. 

Sun Co. v. Hcaly (163 F. R., 48).—The tank steamship Toledo discharged a 
bulk cargo of molasses at Hoboken. The molasses was being pumped out and a 
sea valve not being properly closed water entered the vessel, diluting and damag¬ 
ing the molasses. Held that the failure to keep the valve properly closed was a 
fault in the management of the vessel, from liability for which the Harter Act 
protected the ship and her owner. 

Steamship “ Indranl” (177 F. R., 914).—Steamer arrived in New York with 
cargo stowed in the lower forepeak, occasionally used as a ballast tank and 
connected with the pumps in the engine room by a pipe running through the 
ballast tanks under No. 1 and No. 2 holds. She had picked up a piece of 
cable with her propeller in the Suez Canal, which was removed at Algiers. After 
arrival at destination and before cargo had been discharged from the forepeak, 
the master desired to examine the propeller, and to avoid expense of going on 
dry dock decided to tip the vessel by the head to bring the propeller out of 
water. This resulted in filling No. 1 ballast tank with water, and owing to the 
pipe wich ran through such tank to the forepeak having been fractured during 
the voyage, the forepeak filled with water, which was not discovered for several 
days, damaging the cargo stowed therein. Held to be a fault in the “ manage¬ 
ment of the ship ” and the vessel not liable. 


F. H. Price & Co., 

New York, August 5, 1921. 

Hon. Frederick R. Lehlbach, 

Chairman Subcommittee on Marine Insurance, 

Committee on the Merchant Marine and Fisheries, 

House of Representatives. 

Dear Sir : We inclose herewith copies of cargo policies, as requested by your 
committee. You will observe that these cargo policies set out to insure cargo 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 145 

against a number of well-defined perils, which may all be classed under the 
following general captions: “ Perils of the sea ” (act of God) and the “ Public 
enemy. S >uch policies may set out to pay a claim which amounts to 3 per cent 
L . A., w liich means a partial loss if it amounts to 3 per cent of the insured 
value, but the partial loss must have been caused by one of the perils insured 
against. 

Caigo policies do not insure goods against loss and damage arising from bad 
stowage, shifting cargo, damage while being loaded or delivered, lack of venti¬ 
lation resulting in sweat, etc. 

All losses not insured against on c. i. f. sales fall on the buyer of the goods 
01 upon the steamship company and they affect the expansion or development 
Oi oui foieign tiade, inasmuch as the steamship companies are generally ex¬ 
cused fiom all liability because of the difficulty of compliance by consignees 
with the claim clause in the bill of lading and because packages are generally 
of higher \alue than $100, or whatever is the limit of value contained in the bill 
of lading, and because steamship companies are also protected from liabilitv 
in case of damage to cargo arising from mismanagement of the vessel. 

Very truly, yours, 

F. H. Price. 


F. H. Price & Co., 

Neiv York, August 4 , 1921. 

Hon. Frederick R. Lehlbach, 

Chairman Subcommittee on Marine Insurance, 

Committee on the Merchant Marine and Fisheries, 

House of Representatives. 

Dear Sir: With further reference to the proposed amendment to the Harter 
Act, you may be interested in reading a new law enacted by the Senate and 
Assembly of New York, copy inclosed herewith, section 3, which seems to put 
the burden to prove freedom from liability upon the carrier as regards dam¬ 
age ascertained by this port and State. 

Yours, very truly, 

F. H. Price. 


[Laws of New York. Chapter 202. An act to amend chapter 405 of the laws of 1857, 
entitled “An act to reorganize the warden’s office of the port of New York,” generally. 
Became a law Apr. 14 ,1921, with the approval of the governor. Passed, three-fifths 
being present.] 

The people of the State of New York, represented in senate and assembly, 
do enact as follows: 

Section 1. Section 1 of chapter 405 of the laws of 1857, entitled “An act to 
reorganize the warden’s office of the port of New York,” is hereby amended to 
read as follows: 

“ Sec. 1. There shall be, and hereby is, established a board of wardens for the 
port of New York, which shall be called and known by the name and title 
of “ The port wardens of the port of New York,” and shall be composed of five 
members, one of whom shall be a nautical man who shall be nominated, and 
by and with the advice and consent of the senate appointed by the governor; 
and they shall annually elect one of their number president and another vice 
president. All appointments shall be for the term of five years, except that 
any vacancy shall be filled for the residue of the unexpired term. Any warden 
may be removed for misconduct or neglect of duty, at the discretion of the gov¬ 
ernor, and any warden neglecting or refusing to perform the duties of his office 
or violating the regulations of the board, after due notice from the board, shall 
be liable to suspension by the vote of a majority of the whole board, and during 
such suspension said warden shall not be entitled to participate in the pay and 
emoluments of said office unless reinstated by the governor, by and before 
whom an appeal shall be heard and decided.” 

Sec. 2. Section 2 of such act, as last amended by chapter 142 of the laws of 
1891, is hereby amended to read as follows: 

“ Sec. 2. The said board shall have power to appoint a secretary and fix his 
compensation, who shall hold his office during the pleasure of the board, said 
compensation to be paid out of the receipts of the office. It shall be the duty 
of the secretary to keep, in such books as shall be provided for the purpose, a 
full, true, and complete record of all their acts, proceedings, surveys, and 
60683—21-10 





146 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


reports, and such books shall be open to the public inspection of any person 
interested therein; and the said board of wardens shall have and use a common 
seal, and each warden shall have full power and authority to administer oaths, 
examine witnesses, and take affidavits concerning the business of said office; 
and the said board shall also have full power to make such rules and regula¬ 
tions for their own government and the discharge of their duties under this act 
as they may deem necessary and proper. They shall keep an office in the city 
of New York, at which office a majority of them and their secretary shall give 
attendance daily (Sundays and public holidays excepted), and shall have the 
exclusive right to perform all the duties of port wardens of the port of New 
York, specified in this act.” 

Sec. 3. Sections 3, 4, and 5 of such act are hereby amended to read as fol¬ 
lows : 

“ Sec. 3. It shall be the duty of said board or some one of them to proceed 
in person on board of any vessel for the purpose of examining the condition and 
stowage of cargo, and if there be any goods damaged on board said vessel they 
shall inquire, examine, and ascertain the cause or causes of such damage and 
make a memorandum thereof, and enter the same in full upon the books of the 
office, and if after the arrival in port of any vessel the hatches shall be first 
opened by any person not a port warden, and the cargo or any part thereof 
shall come from on shipboard in a damaged condition, these facts shall be pre¬ 
sumptive evidence that such damage occurred in consequence of improper 
stowage or negligence on the part of the persons in charge of the vessel, and 
such default shall be chargeable to the owner, consignee, master, or other 
person in interest (as part owner or master) of said vessel, each and all of 
whom shall be primarily liable for such damage. And the said board shall be 
exclusive surveyors of any vessel which may have suffered wreck or damage, 
or which shall be deemed unfit to proceed to sea, and shall examine the condi¬ 
tion of the hull, spars, sails, rigging, and all appurtenances thereof, and they 
shall call to their assistance one or more carpenters, sailmakers, riggers, ship¬ 
wrights, or other person skilled in his profession, to aid them in their examina¬ 
tion and survey, provided such person shall not be interested therein, and all 
parties so called shall be sworn and shall each be allowed a fee of $2, to be 
paid by the persons requiring said examination. The said wardens shall 
specify what damage has occurred and record in the books of said office a full 
and particular account of all surveys held on said vessel; they shall also be 
the judges of the repairs necessary to render said vessel again seaworthy, or 
for the safety of said vessel and cargo on the intended voyage. They shall 
also have exclusive cognizance of all matters relating to the surveys of vessels 
and their cargoes arriving at the port of New York in distress, or damaged 
in said port of New York, and shall be the judges of its fitness to be reshipped 
to its port of destination, or whether it shall be sold for the benefit of whom it 
may concern; they shall also, if called upon so to do, estimate the value or 
measurement of any vessel when the same is in dispute or libeled, and record 
the same in the books of said office. 

Sec. 4. It shall be the duty of said board, or some one of them, on being no¬ 
tified and requested so to do by any of the parties in interest, to proceed in 
person to any warehouse, store, or dwelling, or in the public streets, or on the 
wharf, and examine any merchandise, vessels’s materials, or other property 
said to have been damaged on board of any vessel, and inquire, examine, and 
ascertain the cause or causes of such damage and make a memorandum 
thereof of such property, and record in the books of said office a full and com¬ 
plete statement thereof; and it shall be the duty of the said board, when so 
requested, to furnish a certificate of any record in the books of said office to 
any party interested therein upon their paying to the said board the regular 
fee for said certificate. All certificates issued shall be under the seal of said 
office and signed by the president or vice president and by the secretary, and 
said certificate shall be evidence of the existence and contents of such record 
in any court of this State in all cases of inquiries, examinations, and surveys 
relating to vessels and cargoes on board thereof, as specified in this act. The 
said board shall give notice to all persons interested in or having charge of the 
subject matter of such inquiry, examination, or survey by advertisement in at 
least two daily newspapers printed and published in the city of New York of 
the pendency of such inquiry, examination, or survey, and of the time and 
place of completing the same, the expense whereof shall be added to and paid 
with the fee for making such inquiry, examination, or survey. 


THEFT, ETC., OF EXPORT AX'D IMPORT SHIPMENTS. 147 


Sec. 5, It shall he the duty of said board or some one of the members thereof 
to attend personally all sales of vessels when condemned, vessels’ materials 
and goods in a damaged state which shall be sold at public auction in the port 
of New York by reason of such damage, for the benefit of owners or under¬ 
writers or for account of whom if may concern; and it shall be the duty of 
auctioneers making such sales to give due notice thereof to said board before 
the sale, and all such sales shall be made by auctioneers under the direct*on 
and by order of the wardens, for which service they shall be entitled to receive 
a commission of one-half of 1 per cent on the gross amount of sales thereof, 
to be paid to said board of wardens on demand by the auctioneer making such 
sale: and such property shall be exempt from the payment of auction duties 
to the State, and if shall be the duty of auctioneers to make monthly state¬ 
ments to said board specifying the total amount of each day’s sale made by 
them under this act, which statement shall be filed in said wardens’ office, and 
the wardens, when required by the owner or consignee thereof, shall cerpf.v 
the cause of such damage, the amount of such sale, and the charges on the 
same, all of which shall be recorded in the books of said office: and the said 
board of wardens shall be allowed for each and every survey held on board 
of any vessel on hatches, stowage of cargo, or damaged goods, or at any ware¬ 
house. store, or dwelling, or in the public street or on the wharf, within the 
limits of the port of New York, on goods said to be damaged, the sum of $2, 
and for each and every certificate given in consequence thereof the sum of $1, 
and for each and every survey on the hulls, spars, sails, or rigghig of any 
vessel damaged or arriving at said port in distress, the sum of $5; and for 
each and every certificate given in consequence thereof the sum of $2.50; and 
for each valuation or measurement of any vessel the sum of $10: and the com¬ 
pensation and emoluments of said office shall be divided equally between the 
said five wardens composing the board under this act. 

Sec. 4. Section 7 of such act is hereby repealed. 

Sec. 5. Section 8 of such act is hereby renumbered section 0 and amen led to 
read as follows: 

“ Sec. G. The said board of port wardens shall keep a full and accurate ac¬ 
count of all their receipts and expenditures, and transmit to the comptroller 
a true copy thereof annually on the first Monday in each year, and wlrch copy 
shall be verified by the oaths of the president ami secretary of said board, 
and each warden shall append to such account an affidavit that he has not taken 
or received any money or goods as presents, directly or indirectly, for services 
as warden, except the legal fees.” 

Sec. G. Section 8a of such act, as added by chapter 520 of the laws of 1018, 
is hereby repealed. 

Sec. 7. The terms of office of the port wardens now in office shall expire on 
July I, 1021. Prior to that date the governor, by and with the advice and 
consent of the senate, shall appoint five port wardens to hold office for the 
terms of five years, as provided by th ; s act, from July 1, 1921. 

Sec. 8. This act shall take effect July 1, 1921, except the provision of section 
7 authorizing the appointment of port wardens by the governor, which shall 
take effect immediately. 

State of New York, 

Office of the Secretary of State, 

I have compared the preceding with the original law on file in this office 
and I do hereby certify that the same is a correct transcript therefrom and of 
the whole of said original law. 

John J. Lyons, Secretary of State. 

STATEMENT OF MR. E. H. DOWNES, NEW YORK, N. Y., EXPORT 
MANAGER OF CONVERSE & CO., MANUFACTURERS OF TEXTILES, 
ETC. 

Mr. Downes. My regular work is export manager of Converse & 
Co., of New York,’ manufacturers of textiles. I am also director of 
the Argentine Chamber of Commerce, and am down here as chairman 
of the committee on theft and pilferage, representing the American 
Manufacturers Export Association, in which capacity I have served 
since its appointment in June, 1920. 


148 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Our position, Mr. Chairman, is a very simple one. We are interested 
in reducing theft and pilferage—that above everything else. Mr. 
Campbell said yesterday that this hearing was called to discuss ways 
and means of reducing theft and pilferage throughout this country, 
and that is exactly what we are interested in doing. 

It is almost a truism to say that the commerce of this country can not 
go on unless we reduce theft and pilferage. The American Manufac¬ 
turers Export Association represents, roughly, as of January 1, be¬ 
tween TO and 80 per cent of the exporters of this country. They have 
made a study of this question of theft and pilferage during the last 
year and, admitting what was said yesterday, that we can not continue 
to develop our markets if we are going to let this theft and pilferage 
go on, I might add that we can not continue to send down assortments 
nor can we continue to deliver merchandise contrary to the w T ay it is 
ordered. Besides this, the impression now being created in foreign 
countries, regarding the honesty of American exporters, is becoming 
very detrimental to our American trade; and, added to all this, is the 
trouble and expense of collecting claims and presenting them to the 
steamship companies, which begins to constitute an overhead that 
threatens to make it impossible for us at times to compete. 

We have gone into this question of theft and pilferage and we find 
in order to attack it properly in all its phases it would require an out¬ 
lay of money and cooperation of interests which would not be feasible 
all at once. We have, however, attempted to do our duty in some small 
measure by creating a trade protective association which is now at¬ 
tempting to combat some of the evils of this theft and pilferage 
proposition. But we do knoAv, and I think it must be admitted, that 
we can concentrate more upon this phase of this theft and pilferage sit¬ 
uation and correct some of the faults, as they might be called, in our 
present economic system of our export trade. And in this category, I 
would place, first, some such legislation as would place the responsibil¬ 
ity on the possessor of the merchandise, where under the present 
system he is not now responsible. I refer, of course, to the steamship 
companies. I do not doubt but what the shipowners will tell us, too, 
that they are exercising due diligence; I can not imagine any better 
argument. They will probably present facts and figures to show they 
are spending enormous sums of money to protect merchandise in their 
possession; but we do know that part of this theft and pilferage, 
which has been going on, has been due to the negligence of those steam¬ 
ship companies—what proportion we can not tell, and I do not think 
the steamship companies or owners will deny they have neglected in 
some instances to exercise that diligence which would be commensu¬ 
rate with the possessor of merchandise and it would hardly seem fair 
to alloAv him to contract out of his responsibility. Now, if we can 
force them equitably and justly to exercise a little more care when 
they have merchandise, I think it would follow, as a matter of course, 
that we would thereby get a little more protection and reduce theft 
and pilferage. 

I think we can justly require them to do this by refusing to allow 
them to contract out of their responsibility. And if, by exercising a 
little more diligence and care when they have the merchandise, they 
can reduce this theft and pilferage, it would follow as a matter of 
course that the premiums for insurance would immediately come 
down. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


149 


Those are the two main objects in which we are interested and, for 
that reason, at this time, the American Manufacturers and Exporters’ 
Association would be willing to go on record as approving some such 
legislation or amendment as that which has been suggested, as would 
seem to have the two objects of reducing theft and pilferage and re¬ 
ducing insurance premiums, which might thereby more practicably 
and more quickly be obtained. 

Mr. Kirkpatrick. Right in line with what you made as your first 
proposition, it appears one of the other witnesses said there is one 
line that is taking rather extraordinary precautions. Do you know 
anything about that? 

Mr. Downes. No; I am sorry to say I do not. 

Mr. Kirkpatrick. You do not. 

Mi*. Downes. I do not know anything about that particular line. 
That was the Bull Line. 

Mr. Kirkpatrick. I hope if any of the witnesses do know about 
that situation we will hear something about it and get a comparison 
of the results obtained by tire Bull Line and the other lines. 

Mr. Downes. In reply to your question, I would just like to read two 
paragraphs of a letter I have here. I was trying to be careful to say 
T thought the steamship owners would deny they had not exercised 
the care commensurate with their responsibility. I simply want to 
confirm that by two paragraphs from this letter of a member of the 
New York association, which says: 

We had for shipment to Sweden 10 car loads of shoes; with a view to facili¬ 
tating the inland movement of the freight we employed the - forwarding 

company to handle this matter for us, they were to attend to the booking and 
issuance of bills of lading, etc., which were in turn to be surrendered to our 

New York office. The shipment was booked with the-Steamship Co., and 

at the last moment they found it so that they were unable to handle our goods; 

a part of the shipment was then booked with the-Co., and the balance 

with the - Co. Due to a technicality, our bank declined to accept bills 

of lading from-Co., and it was then necessary for us to throw all of the 

shipment to the-Co., agents for the-Line. After they had agreed 

to accept our booking and after a large quantity of it had unloaded on their 
pier, they suddenly decided that unless we would guarantee them against loss 
by pilferage and theft on their docks and against the thievery of their own 
employees, they would not handle the shipment and, as we had only a few 
hours left in order to avail ourselves of the letter of credit which was about to 
expire, we, of course, did the natural thing and issued the guaranty. 

We then put on the docks our own private watchmen and guarded the 
merchandise as best we could under the circumstances. However, there was 
quite a quantity of shoes stolen. One longshoreman was caught leaving the 
pier with two pairs of shoes which were recovered by our watchmen. The 
injustice of the situation has made an indelible impression upon the writer— 
that we, a company in St. Louis—should be asked to give a guaranty to the 
steamship company who had contracted to haul our freight, w r hile the goods 
were on their pier is, to us, a most unusual situation and one that should not 
be countenanced a moment by the exporters of this country. 

Mr. Lehebach. Mr. Downes, yon said that the steamship com¬ 
panies ought not to be allowed to contract out of their just liability 
or responsibility. What have you to say from the standpoint of the 
exporter, as to the freedom that he has to negotiate and contract with 
steamship owners with regard to the t^rms of shipping? 

Mr. Downes. If I gather correctly the implication in your ques¬ 
tion, you would like to know why we do not exercise the prerogative 
of contracting under what conditions we shall ship. You can readily 
understand while this would be a very good suggestion, theoretically, 









150 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

when you come to try it on the steamship company, if you were to 
fight with them on the phrases in their bills of lading, it would make 
an impossible situation on the shipping department. It would make 
it impossible for them to carry on any discussion of rates with the 
steamship company to make objections to phrases in bills of lading, 
and, frankly, there are many of us who are managers who have never 
read a bill of lading through. 

Mr. Campbell. Would the chairman ask this question? 

Mr. Lehlbach. Suppose you ask it, if the witness will yield. 

Mr. Campbell. What practical suggestion has your association to 
make as to an increase in the care the shipowner can exercise? You 
say you represent an association that has studied this question, and 
are chairman of their committee; what practical suggestion can 
you make to the shipowner as to an increase in the care, laying 
aside the question of making him pay? 

Mr. Downes. Making him pay how? 

Mr. Campbell. Pay the loss. 

Mr. Downes. Oh, you mean make him liable for it. Mr. Chairman, 
if that question were asked me as chairman of this committee, I would 
say that I could draw up a complete brief on that point if I were 
given a' few hours to get in consultation with the various members of 
my committee, who are entirely familiar with steamship company con¬ 
ditions. I am not entirely familiar Avith steamship conditions, with 
the routine of the various docks, and I would hesitate to make sugges¬ 
tions which I thought might not be entirely adequate. But I would 
be very glad to draw up for Mr. Campbell, if he desires, pertinent sug¬ 
gestions on that situation. 

Mr. Campbell. You come here criticizing the shipowners; I sup¬ 
pose of your own knowledge. I would like you to give to this com¬ 
mittee, if you can, your practical suggestions. 

Mr. Lehlbach. He just stated he was not in a position to do so, and 
what is the use of repeating a question which the witness has stated 
his inability, offhand, to comply with? 

Mr. Campbell. I did not understand he went that far; he said he 
would go back and consult with the other members of his committee. 

Mr. Downes. I would be glad to do that, if you would like to have a 
written resume of the suggestions. 

Mr. Campbell. I would be glad to have you submit that to the com¬ 
mittee. 

Mr. Downes. I should be very glad to do so. 

Mr. Lehlbach. We would be glad to receive it and incorporate it in 
the record. 

Mr. McComb. Mr. Chairman, I have here a bill of lading which I 
had sent me from Australia, which gives the bill of lading under the 
Australian shipping act. They have a water-carriage act. 

Mr. Lehlbach. We will receive that. 

Mr. McComb. I have here, also, bills of lading from Canada in ac¬ 
cordance with the Canadian act; 1 have here an English bill of lading 
of the Cunard Line, which I believe is in transatlantic service run¬ 
ning between here and England. I also have here a New York Central 
through railroad and steamship bill of lading. If they are of any 
use to the committee I would be glad to give them to you. 

Mr. Lehlbach. The committee appreciates your supplying it with 
these documents. 


THEFT, ETC., OF EXPORT ANI) IMPORT SHIPMENTS. 


151 


Do you desire to ask any further questions, Mr. Campbell? 
r V* Campbell. No; that is all I wanted to ask. 

(The bills of lading furnished by Mr. McComb were filed with the 
committee.) 

(The following letters were later supplied by Mr. Downes and are 
here printed in full, as follows:) 

Converse & Co., 

ir ,, T , T A r eio York, July 25, 1921. 

Hon. F. 11. Lehlbach, 

House, of Representatives, Washington, D. C. 

Dear Sir: l am inclosing you copy of letter I sent to Mr. Campbell, in re¬ 
sponse to liis request. 

Very respectfully, yours, E. FI. Downes, 

Chairman of Committee on Theft and Pilferage, representing 

American Manufacturers Export Association. 


Mr. Ira A. Campbell, 

27 William Street, New York, 


Converse & Co., New York, July 25, 
N. Y. 


1921. 


M\ Dear Mr. Campbell: In the course of the hearing you asked me if my 
association had ever actually put through the prosecution of any cases of theft 
and pilferage. I told you at that time I would be very glad to find out and let 
you know, although I doubted whether the organization, as such, could very 
well embark upon such a course without a great deal of red tape. 

I am advised by the association that they have never carried through the 
prosecution of any cases, but that they have aided in securing information, and 
bringing their influence to bear with their individual members, who have of their 
own accord followed up their own cases. 

Yours, very truly, 


E. H. Downes, 

Chairman of Committee Representing 
American Manufacturers 1 Export Association. 


Converse & Co., New York, July 26, 1921. 

Hon. F. It. Lehlbach, 

House of Representatives, Washington, J). C. 

Dear Sir: Referring to my recent letter of July 21. I am inclosing you copy of 
list of suggestions which I sent to Mr. Campbell. You may recall he asked me 
for these during my testimony, and I told him I would send them to him in 
writing, to be incorporated in the minutes. 

Very respectfully, 

E. H. Downes, 

Chairman of Committee on Theft and Pilferage 
Representing American Manufacturers' Export Association. 


SUGGESTIONS FOR STEAMSHIP COMPANIES. 

Small valuable articles as watches should be kept in a strongroom or some¬ 
thing similar on the boat. This was formerly done, but has recently been 
discontinued. The Ingersoll Watch Co. would be willing to pay a moderate 
additional charge for such accommodation. 

The trouble does not always rest with the type of employees. Checkers and 
watchmen are repeatedly found to be in league with the thieves, and in this 
particular respect marked improvement can be made if men of a higher moral 
standing are engaged in these supervisory positions. 

Sufficient watchmen to be placed on lighters and boats if the cargo is aboard 
or alongside pier at night. 





152 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Misdescription of articles to be shipped should be discontinued. Some ship¬ 
pers do this with a view to securing lower freight rates. This practice does 
not allow the transportation companies to take necessary precautions consistent 
with the class of freight shipped, as additional protection is afforded special 
cargo freight to insure against being tampered with while in steamship com¬ 
panies’ possession. 

Booking of shipments in excess of capacity should not be permitted. 

To reject any package showing bad or insufficient packing. They would 
issue regulations as to classification of packing, according to class of merchan¬ 
dise. 

To go the limit in regard to references and investigations of their employees. 

To employ more checkers so as to avoid delay in discharge and unloading 
on piers. 

To forbid selling merchandise from docks. 

To place enough watchmen on their lighters and boats to exercise strict 
supervision of cargoes on piers. 

To notify the shipper (not the truckman) at once when any package arrives 
to the pier in a damaged condition. 

To establish responsibility of the captains. 

To have strongrooms on the boats. 

To reject packages containing risky merchandise (silks, gloves, shoes, per¬ 
fumery, etc.) when the contents are marked upon the package. 

To distribute the receiving and delivering sections in the piers so that only a 
given number of trucks at a time deliver or receive cargo. 

To offer bonuses to their employees for the discovery and apprehension of 
robbers. 

To communicate to trucking companies, lighterage concerns, steamship com¬ 
panies, railroad companies, stevedores, etc., the name and description (picture 
if possible) of any laborer or employee who may have been caught stealing, 
damaging, or helping to steal or damage packages. 

To employ only very capable stevedores and, of course, well known as honest 
and reliable. 

Not to let any case go without immediate prosecution. 

STATEMENT OF ME. A. B. GRIFFITHS, NEW YORK, N. Y., REPRE¬ 
SENTING THE ASSOCIATION OF COTTON TEXTILE MERCHANTS 

OF NEW YORK. 

Mr. Griffiths. I represent the Association of Cotton Textile Mer¬ 
chants, of New York. This association is composed of the leading sell¬ 
ing houses of the large cotton textile mills of this country. We are 
fighting hard to hold our present export business and to increase it. 
This we can not do unless some steps are taken to curtail theft, pil¬ 
ferage, and nondelivery. We are competing with the old established 
exporting nations, and it is absolutely essential that our merchandise 
arrive at ultimate destination in good condition; otherwise, the time 
and expense of securing the order is lost and probably the customer. 

Insurance to date has kept us from actual financial loss, as far as 
the value of the merchandise is concerned, but it does not recom¬ 
pense us for the lost opportunity for expanding our export business. 
Recently, we have even lost the security heretofore offered through 
insurance, as a majority of the underwriters have recently attached 
a new clause in their policies covering theft and pilferage. This 
clause was due, according to the underwriters, to the enormous 
losses they have suffered, which make it impossible to continue in¬ 
surance on the old basis. This new clause states that the insurance 
company will only pay 75 per cent of any loss, thus making the 
shipper coinsurer up to 25 per cent. This puts a burden on us which 
we can not stand and continue in the export business. We are not 
in the insurance business; neither are we shipowners; we are only 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 153 

people from whom the shipowners and insurance* companies get 
their living. We pay the freight; we pay the insurance premiums, 
and for it we do not get the protection we pay for. 

We hold no brief for the insurance companies, but it appears 
logical that the insurance companies, who at no time have physical 
control of the merchandise, are not in a position to curb these theft, 
pilferage, and nondelivery losses; and we believe the proposed 
amendment to the Harter Act', as submitted by the Trade Protective 
Association, would place the responsibility where it belongs—on the 
companies who actually have control of the .merchandise and who 
must be given an incentive to stop these losses before they will take 
the drastic steps necessary toward improving present methods of 
handling and watching freight in their possession. 

Passing the responsibility to the shipowner, where we think it 
belongs, is only the first step; but it is the most important. After 
that has been accomplished by legislation, cooperative methods can 
be used to stop actual thefts; but until the shipowners are forced to 
become vitally interested in the merchandise, little can be accom¬ 
plished. • 

Mr. Lehlbach. Mr. Griffiths, do your people find that in certain 
circumstances it is impossible to insure against loss by theft or pil¬ 
ferage? 

Mr. Griffiths. Yes, sir. 

Mr. Lehlbach. For certain classes of shipments to certain mar¬ 
kets? 

Mr. Griffiths. They have different rates, of course. Hosiery 
and underclothing carry heavier rates, because the thieves seem to 
be able to spot hosiery and underclothing. 

Mr. Lehlbach. Has the condition reached the point where in¬ 
surance companies have absolutely refused to insure? 

Mr. Griffiths. Not refused, but refused as it relates to 100 per 
cent cover. We can only insure now 75 per cent and 25 per cent 
then becomes a burden on the shipper that we can not cover. 

Mr. Campbell. May I ask this other gentlemen one more ques¬ 
tion. I would like to know whether or not they have attempted 
prosecutions for theft and pilferage in the New York courts? 

Mr. Downes. If who has? 

Mr. Campbell. If your association has? 

Mr. Downes. Not to my knowledge. 

Mr. Campbell. Do you know of any case where they have been 
able successfully to prosecute in the courts a theft and pilferage 
case ? 

Mr. Downes. My impression is they have not; but I can possibly 
verify it and enter the answer in the record, if I may. 

STATEMENT OF MR. P. L. GUITERMAN, NEW YORK, N. Y., REP¬ 
RESENTING THE AMERICAN EXPORTERS AND IMPORTERS’ 

ASSOCIATION OF NEW YORK. 

Mr. Guiterman. I am here representing the American Ex¬ 
porters and Importers’ Association of New York. I am a member 
of a firm of exporters and other export associations, but I am here 
immediately representing the American Exporters and Importers’ 


154 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Association, on' whose pilferage and theft committee I have been 
since it was formed about a year ago, I think. 

The Exporters and Importers’ Association counts among its mem¬ 
bers most of the leading export and import merchants of New York. 
I have brought with me a list of our members that you may, if it 
please you, insert in your record. 

(The list referred to above is as follows:) 

List of Members. 

active. 

American Trading Co., 25 Broad Street. 

Amsinck, G., & Co. (Inc.), 96 Wall Street. 

Arkell & Douglas (Inc.), 44 Whitehall Street. 

Balfour, Williamson & Co., 43 Exchange Place. 

Bencoe Exporting & Importing Co., 82 Wall Street. 

Bo wring & Co.. 17 Battery Place. 

Bush, Beach & Gent (Inc.), 80 Maiden Lane. 

Camacho, Roldan & Van Sickel, 56 Pine Street. 

Cameron, R. W., & Co., 23 South William Street. 

Castillo, Rafael del, & Co., 14 Beaver Street. 

Cowdrey & Winkhaus, 17 Battery Place. 

Darrell, E. F., & Co., 11 Broadway. 

Dodge & Seymour (Ltd.), 193 West Street. 

Douglas X Evans (Inc.), 45 John Street. 

Duncan, Fox & Co. (Inc.), 42 Broadway. 

Dunn, John, Son X Co., 44 Whitehall Street. 

Dutilh-Smitli, McMillan Co. (Inc.), The. 50 Broad Street. 

Ec-havarria, R., & Co., 82 Broad Street. 

Frame, Leaycraft & Co., 64 Wall Street. 

Frazar & Co., 30 Church Street. 

Freeman, R. B., & Co., 140 Nassau Street. 

Gaston, Williams & Wigmore (Inc.), 100 West Forty-first Street. 

General Com. Co. (Ltd.) of United States, The, 295 Broadway. 

Gibbs, Anthony & Co. (Inc.) 61 Broadway. 

Goldsmith & Co. (Inc.), 116 Broad Street. 

Grace, W. R., & Co., 7 Hanover Square. 

Graham, Hinkley & Co., 135 Front Street. 

Guiterman. Rosenfeld & Co., 35 South William Street. 

Hagemeyer Trading Co. (Tnc.), 17 Battery Place. 

Halle-Perris Trading Corporation, 29 Broadway. 

Hartmann Pacific Co. (Inc.). SO Wall Street. 

Hawes & Co., Williard (Inc.), Seventh Street and East River. 

David S. Hays and John L. Denton, 24 State Street. 

Henry, H. S., & Son, 21 State Street. 

Holsam & Co. (Inc.), 25 Park Place. 

Hudson Trading Co., 18 East Forty-first Street. 

Hutli, Gillespie & Co. (Inc.), 135 Front Street. 

Kemsley, Millbourn & Co. (Ltd.). 90 West Street. 

Knox, Win. H.. & Co. (Inc.), 18 Old Slip. 

Kunhardt & Co. (Inc.), 17 Battery Place. 

Lamborn & Co., 132 Front Street. 

Lascelles, A. S., & Co. (Inc.), 10 Bridge Street. 

McFadden, George H., & Bro., 25 Broad Street. 

McGovern, Thomas B., jr., & Co., 132 William Street. 

Mailler & Quereau, 31 Stone Street. 

Markt & Hammacher Co., 194 West Street. 

Markt & Schaefer Co., 193 West Street. 

Medina, J. A., Co., 30 Broad Street. 

Melchior. Armstrong & Dessau (Inc.), 116 Broad Street. 

Muller, Maclean & Co. (Inc.), 11 Broadway. 

Nafra Co. (Inc.), The, 120 Broadway. 

National Paper & Type Co., 32 Burling Slip. 

Neuss, Hesslein & Co. (Inc.), 43 White Street. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


155 


Pan-American Trading Co., 490 Broome Street. 

Parsons Trading Co.. 17 Battery Place. 

Peabody, Henry W., & Co. (Inc.), 17 State Street. 

Peck, William E., & Co. (Inc.), 140 Front Street. 

Pike, H. H., & Co. (Inc.), 108 Water Street. 

Richardson, Orr & Co., 21 State Street. 

Rosco Trading Co. (Inc.), 66 Leonard Street. 

Sherman & Sons Co., 381 Fourth Avenue. 

Smith, Kirkpatrick & Co. (Inc.), 10 Bridge Street. 

Smith & Schipper, 91 Wall Street. 

Strong & Trowbridge Co., 17 Battery Place. 

Thomsen & Co., 90 Wall Street. 

Toledano Exporting Co., 18 Broadway. 

Watts Co., Charles H. (Inc.), 25 Whitehall Street. 

White Co., Park J., 17 Battery Place. 

Wills, George, & Sons (Ltd.), 206 Broadwav. 

Winter, Ross & Co., 50 Broad Street. 

Wonham, Bates & Goode Trading Corporation, 17 Battery Place. 


ASSOCIATE. 

American Exchange National Bank, 128 Broadway. 

American Steel Export Co., 233 Broadway. 

Bank of New York, N. B. A.. 48 Wall Street. 

Corn Exchange Bank, 13 William Street. 

The Equitable Trust Co. of New York, 37 Wall Street. 

General Motors Export Co., 120 West Forty-second Street. 

Guaranty Trust Co. of New York, 140 Broadway. 

Irving National Bank, Woolworth Building. 

The National City Bank of New York, 55 Wall Street. 

National Park Bank, 214 Broadway. 

The National Bank of South Africa (Ltd.), 10 Wall Street. 

The Standard Bank of South Africa (Ltd.), 68 Wall Street. 

United States Steel Products Co., 30 Church Street. 

All the above addresses are in New York City. 

It has been roughly estimated, according to information given me 
last week by the president of our association, that the turnover of 
exports and imports of the association’s members amounted, in 1920, 
to something like $1,500,000,000, in every kind of article and product. 
1 merely mention this fact to prove the importance of the body that 
I have the honor to represent here and its genuine interest in the 
foreign business of this country. 

Before I go to the principal subject matter, I would just like to 
say that I would indorse the suggestions and remarks made yester¬ 
day afternoon by Mr. McGee. He covered a great deal of ground 
that it will therefore not be necessary for me to cover, in regard 
to the effect on the trade of the present situation. I would like to 
indorse those remarks. 

It is well known to your honorable committee that the theft and 
pilferage nuisance has, in the past year or two, assumed alarming 
proportions and has actually reached a stage where it is causing a 
great and lasting injury to the international business of the United 
States and is, at the present time, all important because of the great 
economic loss and waste to exporting merchants and every exporting 
interest in this country—manufacturers, farmers; everyone that 
has anything to do with the exporting of goods, have a very direct 
stake in this matter. 

It can not be dismissed by the stock answer of the steamship com¬ 
panies that the merchants are all right—they can cover by insuring. 
Even if all the risks could be covered by insurance, which as we are 


156 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

all aware is now far from being the case, the merchants would be 
by no means all right. Insurance companies simply base their 
premiums on the risk covered, and when the risk covered is high 
the premium is correspondingly high, and this premium is simply 
paid by the merchants; or, to be more exact, is added on to the cost 
of the goods and thus makes the American goods that much dearer 
in competition with the goods of the rest of the world. 

I would like to point out here an instance of making American 
goods dearer in competition with those of the rest of the world. 
We not only have the competition of European goods, we will say, 
in the South American or far eastern markets, where our com¬ 
petitors also have to add on the high insurance, because they are 
confronted with something like the same situation we are, but if we 
are selling any goods that would compete with goods made in Eng¬ 
land, France, and so forth, and those goods do not have this question 
confronting them at all; do not have this high insurance—in other 
words, if we want to sell, I will say, hosiery, because that is what 
my particular firm does, in England, we are in competition with 
Birmingham, and Birmingham has not any theft insurance to charge 
up in the price of their hosiery, because she delivers her stuff by 
rail to anywhere in England. So that we are in competition here 
with local manufacturers all over the world, a^ well as export goods 
of all great European nations. I think that is an important point 
that has not been brought out, and I would like to lay stress on it. 

Our association has given considerable study to this matter, and, 
with your kind consideration, I will describe some of the phases of 
the situation and offer, on behalf of the association, some suggestions 
for a cure. The committee was kind enough to write our association 
a letter and ask for such suggestions; therefore, I trust it will be in 
order for us to make suggestions. 

It is our belief that the largest single cause—I know Mr. Camp¬ 
bell will want to ask me a question on this, and I want to say 
it is our belief; I have not the proof—it is our belief that the largest 
single cause for the claims on account of theft and pilferage in con¬ 
nection with American export cargo is the fact that the ocean car¬ 
riers have for the last two or three years been able so to word their 
bills of lading as to relieve them of all responsibility, and the courts, 
in construing the Harter Act, have upheld them in this respect. 
Consequently it is not necessary for them to care whether goods are 
lost or not lost, and it actually puts a premium on nondelivery. I 
am not saying that I make the charge that good and reliable steam¬ 
ship companies, of which there are many, do not care whether goods 
are lost or not. I am not making that statement; I am simply saying 
that according to the law and their liability under the law it is not 
necessary for them to take due precautions, and in human nature, 
therefore, it is likely to happen that many of them will not take due 
precautions. I am not making any accusation against the steamship 
companies generally, or saying that they take no care at all; that is; 
much too broad a statement; but under the limited liability clause— 
this $100 clause—there is an opportunity for the best of the ocean 
carriers and a temptation for them to take little or no interest and 
to do nothing to prevent theft and pilferage, while the dishonest 
carrier, or the dishonest employees of the carrier (and there are 
such, particularly with a number of the new concerns that have gone 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 157 


into business in the last few years), may itself steal and pilfer, short 
delivering the goods of any value, and only paying the consignee 
$100 per package. 

It is the opinion of our association that new legislation is neces¬ 
sary to place upon the carriers the responsibility that we believe was 
originally intended to be placed upon them by the Harter Act, but 
which has since been so much lightened by court decision. While they 
have custody of the goods, it is logical that they should be compelled 
to give due care to their safekeeping and have full responsibility in 
the case of default. 

I would like, with the committee’s permission, to illustrate with a 
couple of examples the sort of thing that actually happens. 

The members of our association, who are all exporters, have all of 
them had dozens and scores and even hundreds of non-delivery and 
pilferage losses in the last few years. I have not collected the 
many details from the different companies; I only know that on 
Thursday afternoon last this committee had a meeting. But I could 
give a couple of instances in our own business, which I am sure would 
find many parallels in all the others. One is a large case and the 
other small, but I think they both illustrate and, with your permis¬ 
sion, I won’t mention names of the particular steamship companies in 
those cases. They were both very good concerns and it was nothing 
particularly against them; but under the law they are not responsible 
and, therefore, why should they be responsible? Really, the names 
of the steamship companies do not matter at all. 

In one case we shipped on several steamers about $45,000 worth of 
hosiery. They both happened to be hosiery cases. We shipped 
about * $45,000* worth of hosiery to Genoa. The pilferage claims, 
when they came in, amounted to $10,000 out of $45,000—pilferage; 
nothing else. Those cases were in perfect condition when they were 
handed to the company in New York. Our cases have been approved 
by the underwriters and all that sort of thing. We do not know 
• whether the theft occurred on the dock in New York or on the 
steamer, or on the lighters in Genoa. It did not occur at Genoa, 
because they were surveyed at Genoa; but the point is that nobody 
was responsible. The insurance company paid, but nobody was re¬ 
sponsible at all. In my humble opinion, if the law were amended, 
if there were a proper law on the subject, it would have been 
demonstrated there that the steamship company was responsible, be¬ 
cause they did not deliver the goods in good condition to the lighter¬ 
age people in Genoa; or that the lighterage people were responsible 
bcause they did not turn over the goods in good condition to the next 

carrier, whoever it was. , , 

I think it was the customhouse there that established the survey, but 
nobody was responsible at all. There was no claim on anybody, 
although our customer made a claim on the steamship company, be¬ 
cause we corresponded with them for about a year, but nothing will 
ever come of it. I think that was under the $100 clause, and prin¬ 
cipally under this clause—I do not know what you call it exactly— 
about the notice of claim, which I will come to later. The notice of 
claim has to be in such a legal fashion that it never is done righ • 
[Laughter. 1 Now, there was a $10,000 loss. Certainly, on $45,000 
worth of goods, if that carrier is responsible, they are going to see 
they are not going to lose one-quarter of the shipments. I have no 


158 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

doubt the people in Genoa did very well in silk stockings for several 
months, but it does not help American trade. [Laughter.] 

. The other claim is a very small matter, but it shows what happens 
sometimes. I was called up one day by a dock in New York and 
asked whether we had hosiery of a certain brand and I said “ Yes.” 
They said, “Will you send somebody up here to identify some¬ 
thing?” So we sent a man up to the dock and it seems a Greek 
cook was seen coming off the dock and looking too fat, and he was 
examined and they found him all wrapped around with stockings. 
Then they went to his berth and found it full of them. Now, what 
happened was this: He had stolen these stockings on the outward 
voyage. They were goods shipped by us to a certain port abroad. 
He had stolen them on the outward voyage and he had meant to 
take them off at the foreign port, but apparently could not get off 
the dock while there. So he left them in his berth and intended to 
take them off in New York when he got back. Now this particular 
Greek cook was sent to prison for a year in New York. They said 
it was his first offense—and he had not been over here long enough 
to have a second—but he was sent up for a year, anyway. 
[Laughter.] 

The point is the loss was there. When that case arrived on the 
other side, our people on the other side made a claim on the insurance 
company. The insurance company paid. They probably made claim 
on the steamship company, but as to that I am not certain. I do not 
want to say positively there was no claim on the steamship company, 
but the chances are 10 to 1 there Avas not. The point is that that 
theft absolutely occurred on the steamer: it was the only place it 
could have occurred—the man had the stuff on his person and in his 
berth. As I say, the claim may have been made, but I ha\ T e no doubt 
it was not made in the correct legal form AA’hen the stuff arrived on 
the other side. It never is and can not be; I do not see how it can be¬ 
coming back to the question of insurance, the situation with which 
the exporting manufacturers and merchants in this country are con¬ 
fronted is this: Because of the immense amount of pilferage and the 
fact that the insurance companies find it A 7 erv difficult, if not im¬ 
possible, to hold the steamship companies responsible for their losses, 
they, the insurance companies, have taken an entirely neAv attitude 
and divide their pilferage into three classes. One, no insurance at 
all, at any rate. For instance, I am informed—I do not ship there 
myself, but I am informed by other members of our association, and 
I would like the insurance people to tell me if I am wrong—that Ave 
can not insure goods for theft and pilferage to the west coast of 
South America at any price. 

Mr. McComb. It can be procured. Several companies here say they 
do not do it, but one says it can be procured. You might say it is 
almost prohibitive, if not entirely so. 

Mr. Rush. I aa t ou1(1 like to say Ave got our rates up to 8 per cent and 
then decided it was better to quit. 

Mr. Hill. Our rates are up, sir, to 11 per cent to the west coast of 
South America, which is more than the profit on the goods. 

Mr. Gttiterman. My firm did have one exceptional shipment the 
other day to Puerto King, Strait of Magellan, and they quoted 15 
per cent. We Avere doing that for a London house. We cabled them 
and I do not know what they did; but we did inquire and the insur- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 159 

a lice company here wanted 15 per cent to insure those goods against 
the risk to Strait of Magellan. Now, that is not insurance. 

Then about the 75 per cent insurance. That has been spoken of by 
other witnesses. It means the company will only insure 75 per cent 
and the shipper has to insure the other *25 per cent. 

Now, to the places where we can insure we have to pay a huge 
advance. If I remember, before the war we used to pay to England, 
covering war risk, about one-sixth of 1 per cent for miscellaneous 
merchandise—about one-sixth of 1 per cent covering all risks, 
including pilferage. The rates to England now, I suppose, on stuff 
like hosiery and stuff that is readily stolen, are up to 2 per 
cent—from H to 21 per cent. That is about 1,500 per cent advance, 
roughly, on that sort of stuff. And on general merchandise, which is 
not so readily stolen, I think the rates are about three-eighths or one- 
half of 1 per cent. But anyway, on stuff like hosiery, underwear, and 
gloves, and all those things that are easily stolen, the rates have gone 
up about 1,500 per cent, even to England, which I think is the country 
where the rates have gone up least, because there is not so much 
trouble on the other side, as they have better management. 

Mr. Edmonds. I can see where the game of tumble top originated; 
I think it must have come right from the bill of lading—take one; 
put two; all put. [Laughter.] That is where the insurance com¬ 
panies came in and put the rate up. 

Mr. Guiterman. Now the customer abroad—I speak entirely from 
the American merchant’s point of view—who buys goods, wants to 
receive the goods he bought; and if he does not receive them noth¬ 
ing on earth will make him pay for them. I am hitting here at this 
75-per-cent clause. It is all very fine when you insure 75 per cent 
and tell your customer that is all you can secure; but the customer 
says, “Thank you ver}- much; but I have lost the goods and I do not 
care what the American insurance companies say they will pay on a 
loss; let them give me the 75 per cent and give me the other 25 per 
cent.” You could not persuade your customers that is the only way 
they can buy goods; they have bought them and they want to receive 
them, and it is up to you to deliver them. If you raise too much 
fuss about it and try to make them pay the 25 per cent, they will 
say, “ Don’t talk to us any more.” Therefore, if the exporters here 
can not insure against theft and pilferage and nondelivery, they 
must simply stop business, as they can not possibly add enough 
profit to their goods and still compete with foreign goods, to pro¬ 
vide for the total known ratio of uninsurable loss. It can not be 
done; you could not sell your goods if you tried to. 

I would like to mention here that our agent in Switzerland—I 
am sorry I did not bring the letter—about a year ago our selling 
agent for stuff in the wearing apparel line could not get any more 
orders; the people were not going to buy anything more from 
America, because the stuff was so pilfered, and he could not get any 
more orders. If, however, the steamship companies are made to 
bear their proper responsibility for losses occurring while the goods 
are in their care, they will, in our opinion, quickly take the pre¬ 
cautions that they always should have taken, thus avoiding a great 
deal of the economic loss that now exists, and the insurance com¬ 
panies will again insure, at reasonable rates, to cover against risks to 
goods while not in the hands of the steamship companies; in other 


160 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

words, while they are in the hands of the truckman on this side or 
after they have left the custody of the steamship company on the 
other side. 

It is a relatively simple matter; it is not nearly as difficult as some 
people say. When you deliver goods to the steamship company, if 
they are in good condition, they give you a receipt “ received in 
apparent good order and condition.” Now, they are very careful 
and rightly so. No steamship company will accept goods in second¬ 
hand cases, even though they are very <rood cases, without putting 
on the bill of lading a clause “ secondhand cases,” or something of 
that sort, so that the bill of lading is clear; or if the goods are 
recoopered, they will put on the bill of lading, “ cases recoopered.” 
That is all right. Now, when they deliver them at the other side, 
all we ask is that they get a receipt in the same condition as the 
receipt they gave; or, if they do not, that they are responsible for 
the difference; in other words, for what has happened on the voyage. 
If the steamship company receives five cases from John Jones in 
apparent good order and condition, and when those cases arrive in 
Liverpool they show signs of being broken into, and the custom¬ 
house, or whoever it is, then gets a receipt “ received five cases from 
carriers, three cases apparently broached on voyage,” then we 
maintain that should be notice of claim and legal notice coming to 
the steamship company. There are no lawyers down on the docks 
to make out a claim in legal form, and that could come later; but the 
steamship company should be liable for what happened to those 
three £ases while in their possession. We do not maintain the ocean 
carrier shall be responsible for everything that happens from the 
time the goods leave Chicago until they get to some place in the 
interior of China, or anything like that; but just that every carrier 
shall be responsible for the goods while in that carrier’s possession. 
No one else can be responsible; no one else can watch them. 

Now, I would like, if I may—there were to have been two mem¬ 
bers of our association to attend this bearing, but the other member 
could not come—and if I may, I would like to read a not very long 
report from the insurance department of W. R. Grace & Co. to My 
Fowler, which Mr. Fowler has just sent to me. I think it brings 
up some points that have not been brought out, which are rather 
important: 

THEFT, PILFERAGE, AND NONDELIVERY. 

July 15. 1921. 

Memorandum for Mr. Fowler: 

Tlie extraordinary increase in losses due to the above causes during the 
past three years has caused a situation which seriously affects our export 
trade and a strong factor is unquestionably due to the merchandise being in¬ 
sufficiently safeguarded while in custody of steamship companies, not only on 
the pier, but also during the voyage and while in course of discharge. As far 
back as 1918 we noted the increasing number and value of claims, and on one 
occasion corresponded with Lloyd’s agent at a Brazilian port asking specific 
details in regard to a certain claim and also requested his suggestions tending 
to show how the losses occurred. The reply dealt very frankly with the situa¬ 
tion, and in this agent’s opinion wholesale pilferage was carried on during 
discharge due to insufficient supervision on the vessels, and it is stated that 
American vessels were especially lax in this respect, which fact was proved by 
the eagerness displayed on the part of all longshoremen to assist in discharging 
American vessels. 

There can be no doubt that if the steamship companies were held liable for 
a greater value that they would take summary steps to safeguard shipments 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 161 


while in their care, for at the present time their limitation of liability is so 
small in comparison to the value of the merchandise that they apparently do 
not consider the extra expense in supervising on the pier or while on the voyage 
would be justified. It is a practice of practically all steamship agents at for¬ 
eign ports to deny liability of any kind, and although we have for years de¬ 
manded that consignees tile claim against the carrier, the inevitable reply is 
that the steamship companies never acknowledge claims and that it is a waste 
of time to make any attempts at recovery. We have, however, insisted that 
this course must be followed, and practically all our branch offices and clients 
now make formal claim in writing whenever merchandise arrives damaged 
or short, so that underwriters may take wliat steps they consider necessary to 
enforce the carrier to admit their responsibility. 

In former times it was sometimes possible to collect full value of any short¬ 
age up to the amount of the steamship company’s liability (usually $100), but of 
late years the tendency has been for steamship companies in event that they can 
not escape admitting liability to only respond for such percentage of the $100 
limit as is represented by the shortage compared with the full value of the 
package. For example, a case of silk hosiery containing 200 dozen pairs of 
stockings valued at $2,000 and robbed to the extent of 5 dozen pairs, or one- 
fortieth of the total, would only be admitted as one-fortieth of their liability 
of $100. The result : Payment is offered in the sum of $2.50, which, of course, 
is not worth considering. Carriers should unquestionably be made responsible 
for a greater value than $100 per package, and further they should accept 100 
per cent of all claims up to their full legal liability, and claims should not be 
governed by a percentage of the value. I consider this point as most im¬ 
portant; otherwise, if they are permitted to settle on a percentage basis, the 
increase of their liability would have very little effect in event of pilferage of 
part contents. 

From our own records the losses due to theft have increased enormously 
since 1916. and on checking up our figures we find the following ratio of losses 
compared to premium: 1916, 25 per cent of premiums; 1917, 70 per cent of 
premiums; 1918, 250 per cent of premiums; 1919, 200 per cent of premiums; 
1920, 125 per cent of premiums. 

It will be noted that there was a distinct drop in the ratio of losses in 1920, 
but this is undoubtedly due to the cumulative results of educating consignees 
into prompt clearance of merchandise, strict examination of packing at this 
end, supervision and rechecking before delivery to the truckmen and after the 
delivery to the pier. We took extraordinary measures in the latter part of 
1919 and 1920, with result that our percentage of losses was reduced, and I 
think it safe to say that the steps taken are limiting a large percentage of 
losses which occurred prior to delivery to steamer, but, of course, we could not 
follow the merchandise after the steamship company had receipted for same. 
Therefore, losses which were afterwards certified to on arrival must have 
occurred while in the custody of the carrier. 

It mio-ht be well to mention here that the firm of W. R. Grace & Co. 
is in a position to take precautions and steps that smaller concerns can, 
not always take; in other words, their volume of business is so enor¬ 
mous that they can follow goods up where a smaller concern would not 
be able to do so. Lots of our members, I can say, employ men to watch 
goods up to a certain point, but everybody can not do that—particu¬ 
larly people who are out of New York, as a great many shippers are. 

To continue reading: 


Prior to 1916 the rates to South American ports varied from one-half to one- 
fourth per cent, with the exception of certain ports where the rate was as high 
as 1 per cent, but now it is difficult to insure at any rate of premium, and where 
such coverage can be obtained the premium charge amounts to from 5 to 10 per 
emit which, of course, increases the costs to the consignee of American merchan¬ 
dise’ vervseriouslv. Before the war rates to Europe varied from one-tenth to 
one fourth per cent, and in this area the rates have also increased enormously, 


one-rou rui per 

varying from 2 to 10 per cent. 

I won’t read the rest of this 
hearing. 

60683— 21-11 


It is in line with what w T e have been 


162 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

The only other point is—and it is a very good point—that shippers 
should be more careful in using trucking firms that have an unfortu¬ 
nate loss record, and great care should be exercised that truckmen 
deliver to the pier on the same day. 

Mr. Campbell. Will you read that part of the record? I am 
anxious to hear what he has to say about it. 

Mr. Guiterman. I am reading that part: 

* * * Great care should be exercised that truckmen deliver to the pier on 

the same day the goods were picked up at the railroad or warehouse. Under no 
circumstances should valuable merchandise be left in the custody of truckmen 
overnight. 

Surely that is where a great many losses happen, but that is before 
they get to the steamship company, and there are a great many such 
losses by the employment of truckmen without sufficient responsibility, 
or perhaps with plenty of financial responsibility, but some of them 
have a business on the side. 

Mr. Free. May I ask you one question? 

Mr. Guiterman. Certainly. 

Mr. Free. In employing these truckmen do you make any attempt 
to make the concern responsible and to check the goods from the time 
they leave your warehouse until they get down to the pier ? 

Mr. Guiterman. I suppose every concern has its own system. We 
do. Our own firm employs a responsible firm of truckmen, who are 
absolutely responsible if they lose a case; and if they lose a case we 
simply make a claim on them and they pay for it. 

Mr. Free. Do they ever pay? 

Mr. Guiterman. Yes; because they are very responsible people that 
do that. There are a great many concerns, particularly concerns not 
familiar with export business, who employ truckmen, and they do not 
know who they are. 

Mr. Free. Then your trucking arrangements have been quite satis¬ 
factory ? 

Mr. Guiterman. Yes; I would say our own have been very satis¬ 
factory. 

Mr. Free, Then your losses have occurred after the goods have been 
delivered on the dock ? 

Mr. Guiterman. Our own have; yes. 

Mr. Free. Have you any means of knowing whether the trouble 
occurs, then, while the goods are being put on the ship or afterwards ? 

Mr. Guiterman. When they are once on the dock we can not follow 
them at all. 

Mr. Free. Then a large part of this trouble, so far as you are con¬ 
cerned, occurs after the goods reach the dock ? 

Mr. Guiterman. All of ours. We are in New York and we send 
the stuff right from our own warehouse to the steamer; we get the 
stuff ourselves to the steamer in good condition. But that is not the 
case with a lot of concerns who ship from the interior. 

Mr. Free. Have the steamship companies any means of con¬ 
trolling the stevedores, outside of simply putting on watchmen ? 

Mr. Guiterman. I am not familiar with what the steamship com¬ 
pany’s arrangement is with the stevedores; but I should think it 
would be possible for the steamship companies to control their own 
servants—I should think so. They are not employed by the shipper. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 163 

They must be employed by them; they are paid by the steamship 
company. The rate of freight includes loading and stevedoring onto 
the steamer. 

Mr. Edmonds. The lighterage man in New York is employed by" 
the railroad companies, usually, is he not? 

Mr. Guiterman. Yes; in full carloads. The shipper loads the 
cars and the railroad company delivers on the lighter to the steamer. 

Mr. Edmonds. And any loss there would belong to the railroad,, 
because they agree to deliver alongside ? 

Mr. Guiterman. Yes; they are in the position of a trucking com¬ 
pany for the railroad. 

Mr. Edmonds. Now, does the railroad company accept liability to 
alongside the ship under the railroad act? 

Mr. Guiterman. I do not know anything about that act, for the 
reason I never had any question of that sort. If we order a carload 
to the steamer the railroad company gives us a receipt, and there is 
never any question of evading responsibility. Perhaps some one else 
could answer that question better. I have never had occasion to in¬ 
quire into the legal position of the railroad company. 

Mr. Kirkpatrick. Do you find any difficulty in getting coopera¬ 
tion from the steamship lines in fixing the responsibility, where 
there is some chance of fixing it on some one else * Say there is 
some question as to whether the liability belongs to the steamship 
company or to the lighterage company, or to the trucking firm. Do 
you find that the steamship company is indifferent about giving 
information—do you find difficulty about getting information you 
want? 

Mr. Guiterman. That is a very hard question to answer, because 
in my own particular business it is entirely export and the merchant 
loads at the other end, and all we hear is that they can not do any¬ 
thing with the steamship company—that they can not get any 
redress. I mean we do not have to handle that; we always deal 
with the steamship company’s representative at the foreign port. 
It is c. i. f. or f. o. b., whichever it is. 

Mr. Kirkpatrick. It seems to me that would be another phase of 
the question. By imposing any additional liability on the steam¬ 
ship company, if they were liable it would be a very strong incentive 
for them to produce proof that some one else was liable, if they had 
that proof in their possession. 

Mr. Guiterman. The indications we have from various corre¬ 
spondence from various companies abroad is that the steamship 
companies mostly rest on their freedom from liability and do not 
trouble about that. That is the indications we have; it is not in 
our own personal experience, because we do not handle it ourselves. 
And again, I want to say there are good steamship companies and 
bad steamship companies, and some of the steamship people, the 
older lines, the better established lines that have been running for 
a o-reat many years, do handle these things in many instances differ¬ 
ently from'some of the others; and also I suppose in countries 
where they have more control it is not so difficult. But, naturally, 
when it comes to liability, if there is no liability by law they are not 
going to take on any liability that does not belong to them. That is 
human nature. 


164 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Kirkpatrick. And perhaps they are not going to try to put 
it on somebody else? 

Mr. (tuiterman. That is human nature, too. 

Mr. Edmonds. Let me ask you a question in connection with Mr. 
Herrick’s testimony, I think it was, last night. Is it customary, or 
does it happen very frequently, that a part of the shipment is sent 
on one steamer and the balance of the shipment left for another 
steamer ? 

Mr. Guiterman. That is more in the case of shipment of bulk 
goods. We ship mostly manufactured goods, and they mostly go on 
the same steamer. I think Mr. Herrick deals in very large quanti¬ 
ties of bulk goods, and perhaps it is a little different with him. 

Mr. Edmonds. I have in mind a shipment that w T as made to Aus¬ 
tralia—if I am not mistaken, it was on the Luckenbach Line—in 
which there was a shipment of machinery. Of course, it was no 
good without the whole of it going on one steamer—every particular 
part of the machinery. The man got it and it was absolutely use¬ 
less to him. After waiting four months, he got the balance of it. 
Is that customary in steamship companies to do that kind of thing? 

Mr. Guiterman. We have not had that experience. 

Mr. Edmonds. I am not sure it was the Luckenbach Line; I just 
remembered the story printed in the Scientific American. 

Mr. Guiterman. I would say that was exceptional. 

Mr. Edmonds. The steamship bill of lading reads if they can not 
put it on one steamer they will put it on another. 

Mr. Guiterman. I have no doubt it does. 

Mr. Edmonds. Do foreign steamers do that, too? 

Mr. Guiterman. I have not seen the foreign bills of lading, but I 
think they are about as broad as the American. 

Mr. Price. That has been our experience for a number of years. 
We had that experience for a number of years prior to the war. bf 
shipments of flour being divided into parts and going forward by 
following steamers. The bills of lading provide for that situation 
by saying “ to be forwarded by steamer or following steamers of the 
line.” 

Mr. Edmonds. Is that also done by foreign steamers ? 

Mr. Price. Yes, sir. 

Mr. Guiterman. I think so. I think they all have that. 

• Mr. Edmonds. I understood that Canadian shippers or people 
shipping in Canadian lines contended that was not so with Cana¬ 
dian lines—that is the reason I am asking the question—that when 
they book a shipment they take it. 

Mr. Price. We have the same experience out of Montreal as out 
of American ports on the same class of traffic. 

Mr. Edmonds. With the English line steamers? 

Mr. Price. Yes, sir. 

Mr. Guiterman. There is another point here, which is brought to 
my attention by one of the members of our association, but I think 
it has more to do do with the South American business that I am not 
so familiar with. It is in connection with notice of arrival. In 
certain bills of lading there is a clause which states that the carrier 
is not held responsible for giving notice of arrival to consignee, in 
consequence of which we have had instances of short delivery where 
more than six months’ time elapsed before presenting claim to the 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 165 


steamship company or to the steamship company’s agents. On some 
bills of lading that is so, that the company has the right to discharge 
at once and you have no right to make claim after a certain time, 
and yet they have no obligation to give notice of arrival. That is 
only the case on some lines; but it does not seem fair and should 
perhaps be considered in case there is an}^ legislation. 

The three principal points wherein, in the opinion of our associa¬ 
tion, the present law requires amendment, are: 

1. Limit of liability. 

2. Burden of proof. 

3. Notice of claim. 

Limit of liability : The steamship companies now are entitled under 
the law to limit their liability to a certain amount for each package, 
but do so in their bills of lading in amounts varying from $100 to 
£200, but mostly in the neighborhood of the smaller amount. I have 
here a number of bills of lading of various steamship companies. I 
would like to point out one thing: There is a bill of lading here which 
has the following clause: “ Also steamer not responsible for robbery 
that can be covered by insurance.” [Laughter.] 

That sinks in a little. But on most of these bills of lading there is 
a clause either to the effect that the liability is not to exceed $150 
per package, or $100 per package. Here is an Australian bill of lad¬ 
ing which is £200 per package, which is a good deal more reasonable. 
That is a great exception. Another Australian bill of lading is £10 
per cubic foot, or £200 per package. These Australian bills of lading 
are £10 per cubic foot or £200 per package. Here is a French bill of 
lading, $5 per cubic foot. By Australian bill of lading, I mean New 
York to Australia. Here is an American line, American-Australian, 
and the Commonwealth and Dominion. I do not know what bills of 
lading the American-Australian have, whether English or American. 
These are both British companies that have the £200 liability. 

I have looked through a great many bills of lading and these are 
the only ones I found that had that £200 liability. These are all 
about $100 or $150 per package. 

The result of this is obvious. It is cheaper to lose a valuable pack¬ 
age than to give proper care to its safe-keeping. I think that is a 
point that we rather want to stress, that it is cheaper to lose a valu¬ 
able package, under the present law, than to give it proper care. 

Now, in regard to the Harter Act. In a general way, we indorse 
the suggestions of the underwriters, but we have this special problem 
to consider. The steamship companies will say, “Well, if you want 
us to take full liability for the package, whatever the value is, you 
must pay us accordingly,” and they will point out, I think, that we 
already have the right to declare a package at $5,000 or $10,000 if 
we want to pay accordingly. But here is the, point: With all 
due respect to them, when we declare the value very high, they 
charge at present an absolutely exorbitant rate of freight—quite out 
of proportion to the additional care needed. Now, if the steamship 
companies say, “ We do not wish to be unreasonable, but certainly 
you can not expect us to give special care to a package that is worth 
$10,000 if you only pay a dollar freight or $2 freight. Pay us more; 
declare the value, and we will take care of you all right.” But we 
have the $10,000 package. We do not want to pay $100, 1 per cent, 
we will say, or 2 per cent, $200, to take that across. And it was sug- 


166 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

gested at a meeting of our members the other day that something 
might be worked out along these lines—I would rather not give the 
exact wording for an amendment, but would like to file our associa¬ 
tion’s suggestion before the committee to be studied and to see if any¬ 
thing could be worked out, and that is this, that the liability of the 
steamship companies be increased to some reasonable amount per 
package, at its regular rate of freight. The amount might be $500, 
or it might perhaps vary according to the classification. In other 
words, $250 or $500 would be a reasonable amount for a package of 
woolen wear; whereas, for silk, $1,000 might be right, or for silk 
goods $500, or perhaps an average valuation of from $500 to $1,000 
might be nearer. 

The committee should study that. But above that, the steamship 
carrier should still be liable, provided that the shipper declares the 
value and the steamship company should have the right to charge 
the shipper, in addition to the regular classification freight rate the 
cost to the steamship company for its own theft, pilferage, and non¬ 
delivery insurance on the excess valuation—the idea being that some 
steamship companies can insure on their steamers a great many 
packages to a much better advantage and more reasonably than the 
shippers can do it individually; that, furthermore, if they do insure 
it, the insurance companies will more or less insist on their giving 
proper precautions to the care of the goods in order that they may 
get a decent rate of insurance. Then the shippers would be paying 
the classification rate, whatever it is—50 cents a cubic foot, or 75 
cents a cubic foot—and, in addition, we will be paying exactly what 
it costs the steamship company to insure their excess liability. They 
would not lose anything. If they lose the package, they pay us and 
they collect from the insurance company. 

Now, that is a thought we just arrived at last Thursday in the 
meeting of the directors of our association, and they thought some¬ 
thing might be done along those lines, and we would like to put 
that before the committee and put it on the basis that it is abso¬ 
lutely fair to the steamship companies as well. There is no hard¬ 
ship to that and the shippers would know where they were. 

In regard to notice of claim, the present court ruling, as I under¬ 
stand it, is that a notice is not legal unless it is given before removal 
of the goods from the dock, and a notation on the receipt is not a 
legal notice. That, I understand, is not in the Harter Act, but that 
has been the court’s ruling. Now, that is so obviously unfair; it is 
unnecessary to discuss it; but our association recommends the fol¬ 
lowing as an amendment to the Harter Act: 

Notice of all claims for loss or damage, visible from a superficial 
examination of the merchandise, or of the barrel, box, bale, package, 
or other container holding the same, shall be given the carrier before 
removal from the dock or customhouse; but a notation on the 
receipt given the carrier for any goods or merchandise to the effect 
that the same was in damaged condition or short, shall be deemed 
sufficient notice of claim. Notice of all claims for loss, damage, or 
shortage discoverable only by opening the barrel, box, or other 
container, shall be given carrier within a reasonable time after de¬ 
livery of the merchandise to consignee ; such reasonable time being 
determined by the nature of the merchandise transported and the 
circumstances of each case. No clause shall be inserted in any bill 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 167 


of lading or shipping document, whereby the time within which 
suit must be brought against any vessel or carrier subject to the pro¬ 
visions of this act, shall be limited to a period less than one year. 

I understand it is six months now, and it does not give sufficient 
time for a distant nation. 

Mr. Kirkpatrick. At what interstate point along the line of de¬ 
livery is the receipt given ? 

Mr. Guiterman. You mean on the other side? 

Mr. Kirkpatrick. Yes. 

Mr. Guiterman. On removal from dock, as a rule. 

Mr. Kirkpatrick. At the time of removal from the dock? 

Mr. Guiterman. As I understand it; yes. The customs house 
comes in there, particularly in some of the South American ports; 
but I think the customhouse has to give that receipt to the steam¬ 
ship company. I think that is the way it is done.. That is the way I 
understand it is done. 

There is just one other point, and then I am through. Another 
amendment which we recommend is this: In the event of loss or dam¬ 
age the burden of proving freedom from negligence shall be upon the 
vessel and her owner. 

The reasons for that have been thoroughly given by other speakers 
and so I won’t go into that. 

Mr. Campbell,. I should like to know whether you make it a 
practice to bind your cases containing hosiery with iron straps? 

Mr. Guiterman. Yes, sir. We use extremely good cases. 

Mr. Campbell., In your particular business? 

Mr. Guiterman. Yes. 

Mr. Campbell. Is that customary, however, with all exporters? 

Mr. Guiterman. The insurance companies lately—I saw these 
policies—have a clause on their hosiery insurance policies, I think, 
stating the insurance is void if they are not so properly packed. 

Mr. Campbell. That is a recent innovation? 

Mr. Guiterman. That is recent; yes. 

Mr. Campbell. During the period within which these large losses 
have taken place, in 1919 and 1920, it was not necessary for exporters 
to put an iron strap on the box, was it? 

Mr. Guiterman. It was customary; it has been customary for ex¬ 
porters who knew their business for many, many years—for 25 
years I have had it, and these shipments I was speaking about, in 
1920, they were all thoroughly strapped and excellent cases; I mean 
to say they were in such shape that the thieves had to have plenty of 
time to rob them; they could not do it quickly. 

Mr. Campbell. In a shipment from a New York warehouse of 
exporters to South America or Genoa, did you say that it would 
be practicable for the shipowner to open each case and count the 
contents .to see whether they had received it all or not ? 

Mr. Guiterman. No. I would not ask that; I would not like to 
do that, because there would be too many employees. 

Mr. Campbell. Aside from your humor, is it a physical possi¬ 
bility ; is it practicable in your business ? 

Mr. Guiterman. I do not think so. 

Mr. Campbell. Now, you make sure in your own business that 
these trucking concerns in New York deliver cargo to the steamship 


168 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

companies on the day that they take it from your warehouse; is 
that right ? 

Mr. Guiterman. I may say we do in our business; yes. 

Mr. Campbell. You do in your business? 

Mr. Guiterman. Yes. 

Mr. Campbell. You keep a system of check upon the truckman to 
see that that is done? 

Mr. Guiterman. Well, I would have to get our shipping depart¬ 
ment to make a definite answer to that. I am not handling the 
routine details of the shipping department; but I am under the im¬ 
pression we do keep a very close check on it. 

Mr. Campbell. You do know, however, it has been very customary 
for trucking concerns in New York to take those goods in their own 
warehouse over night while in course of transportation to the steam¬ 
ship company? 

Mr. Guiterman. I know it has been done; I would not say it was 
customary. 

Mr. Campbell. It is a very common practice. 

Mr. Guiterman. I would not say it is; but I know it has been 
done. 

Mr. Campbell. I would like to have you name to me one steam¬ 
ship company which has changed the terms of its bill of lading 
since the war broke out. 

Mr. Guiterman. I have not read a bill of lading for years until 
this week. 

Mr. Campbell. Then did I understand you correctly to say the 
companies had changed them? 

Mr. Guiterman. I am so informed; yes. 

Mr. Campbell. You have no personal knowledge of it? 

Mr. Guiterman. I may say on competent authority—may I ask 
you a question? 

Mr. Campbell. Yes. 

Mr. Guiterman. Do you maintain that no steamship companies 
have changed the form of their bills of lading in the last three 
years ? 

Mr. Campbell. I know of none; and I have made very diligent 
inquiry since the suggestion was made here and have found none. 

Mr. Guiterman. No changes? 

Mr. Campbell. I do know that clauses you read here have ap¬ 
peared upon bills of lading for years, and during the very period of 
time when our friends admit the pilferage losses were negligible. 

Mr. Guiterman. May I ask this: Do you consider a rubber stamp 
put on a bill of lading is a change in the bill of lading? 

Mr. Campbell. Yes. 

Mr. Guiterman. If they are, do you not know new rubber stamps 
have been put on the bills of lading in the last three years ? 

Mr. Campbell. Yes; during the war there were many new rubber 
stamps put on bills of lading; but that is not a change in the form 
of the bill of lading. [Laughter.] 

Mr. Guiterman. Oh, yes, it is; it changes the contract. 

Mr. Campbell. Many of the rubber stamps put on to meet war 
losses were in use on the bills of lading that were printed and pre¬ 
pared before we got into the war. 

Mr. Guiterman. Those rubber stamps are still on. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 169 

Mr. Campbell. But excepting for losses which concerned war 
conditions, you will find there has practically been no change. 

Mr. Guiterman. You still use the same rubber stamps that you 
did during the war? I am not in the shipping department and am 
not an expert, but I am under the impression that is a change. 

Mr. Campbell. Bubber stamps have always been used. 

Mr. Guiterman. But some are now used that were not used before 
the war? 

Mr. Campbell. In this big loss that you spoke of, when were the 
missing articles first discovered? 

Mr. Guiterman. We received the usual thing, you know. The 
survey took place at Genoa by Lloyd’s agent. I do not remember— 
the papers came in the usual form. I really could not answer that 
question; I was not there. 

Mr. Campbell. Do you not put it forward as a sample case that 
should impose liability on the steamship company? If so, I would 
like to have you tell the committee—trace the transportation of that 
article from the moment it left your warehouse until the loss was 
discovered. 

Mr. Guiterman. I will answer that. 

Mr. Campbell. And also whether or not it was a package that 
any one of the truckmen could practically have opened during 
transit ? 

Mr. Guiterman. Surely. That is why I brought out that case. 
Thank you. The point is, the cases were in good condition when 
they were delivered to the steamship company’s dock in New York. 

Mr. Campbell. Let me ask you there: Were they taken by your 
truckma n ? 

Mr. Guiterman. Yes. 

Mr. Campbell. And delivered to the dock on the same day ? „ 

Mr. Guiterman. I assume so. 

Mr. Campbell. Was it? 

Mr. Guiterman That is our universal rule. 

Mr. Campbell. Was it in this case? 

Mr. Guiterman. I am not beyig cross-examined. If you like. I 
will tell you this in my own way, if you do not mind. 

Mr. Campbell. I want the facts. 

Mr. Guiterman. I will tell you in my own way. The goods were 
delivered to the dock in New York in good condition by our regular 
truckman in the regular way that we do our business every day. 
They were turned out at Genoa to the lighters. Now, there is the 
point; I do not know whether the theft or any part of it, or all of 
it. occurred on the steamship or in the steamship company’s pos¬ 
session, or I do not know whether it occurred when the goods were 
in the possession of the lighters. The whole fault is. in my opinion, 
and that is the reason I brought it up, that at present there is no 
absolute means, an absolute law, where you can determine in whose 
hands the loss occurs. If the steamship company were compelled 
by ] aw —I am not expressing that very well; if the changes we ask 
for were to take place, the steamship company would either get a 
clean receipt from the lighterage company or an unclean receipt. If 
this steamship company got an unclean receipt from the lighterage 
company, they are responsible; if they get a clean receipt, then the 
lighterage company is responsible. But now, as I understand it, it 


170 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


does not make any difference what receipt they have; it does not 
make any difference what receipt is oiven, it is not a notice of claim. 

Mr. Campbell. From your personal knowledge, is it the practice 
of the steamship company to take receipts on discharging the cargo? 

Mr. Guiterman. Not exactly. I simply affirm what I said before, 
that many times we have a claim and find the steamship companies 
are not liable. 

(The following letter was later received from the American Ex¬ 
porters’ & Importers’ Association and is here printed in full, as fol¬ 
lows :) 

New York, N. Y., August 2, 1921. 

Hon. Frederick Ii. Lehlbach, 

Chairman Subcommittee on Marine Insurance , 

House of Representatives , Washington, D. C. 

Dear Sir : Supplementing tlie statement made by our Mr. Guiterman at the 
hearings recently held by your esteemed committee, we submit the following 
quotation from a letter just received from our sister organization, the United 
States Exporters’ Association in Buonos Aires: 

“At the probable risk of repeating information already known to you, and with 
a view to getting from you an expression of opinion concerning the matter in¬ 
volved, as well as advice as to what has and what can he done toward eliminating 
difficulties with which our members are contend ng, we place the following before 
you: 

“ Responsibility of steamship companies for pilferage and nondelivery of mer¬ 
chandise. —Under the ‘released bill of lading,’ as you know, the liability of the 
steamship companies is limitted to $100 United States gold per package. The 
number of lines of merchandise representing a value of $100 or less per package 
is infinitely small, and consequently it is rarely that the amount collected from 
the steamship company for pilfered goods is sufficient to cover their value. As 
a matter of fact, the valuation of $100 per package, in most cases, bears no rela¬ 
tion to the actual value of the merchandise. 

“ It is our understand ng that the carriers have been enabled to evade what 
seems to us to be the responsibilities which are logically theirs, through the 
modification during very recent years of the common law by statutes and judicial 
decisions. It appears to us that a carrier receiving for merchandise in good 
condition at port of shipment and being paid to carry the same to destination 
should logically be obliged to fulfill his contract by delivering the merchandise 
in good condition at destination or respond for the full value of the missing 
goods, or to the full extent of any damage done to them, unless resulting from 
an act of God, the public enemy, or the inherent nature of the goods. And we 
believe that under the common law and until very recent years the steamship 
companies were held so liable and responded for loss and damage without 
attempt to evade their responsibility. It, perhaps, is conceivable that during 
the general upheaval attendant upon the World War, there may have existed 
well-founded reasons for the temporary modification of the common law, hut 
the result has been a vast amount of theft, pilferage, and carelessness on the 
part of carriers’ employees, losses on this account have assumed serious pro¬ 
portions, and these have fallen very largely upon shippers, consignees, and 
underwriters. 

“As experience has proved the position brought about by the modification 
of the common law to he an inequitable one, and as there seems no longer to 
exist any reasonable excuse, if there ever did exist one, for limiting the lia¬ 
bility of the carriers, we are of the opinion that the exporters in the United 
'States should interest themselves in an active way to bringing about legisla¬ 
tion which will oblige carriers to carry freight under a uniform bill of lading, 
involving upon them responsibility to deliver at destination in good condition, 
merchandise entrusted to their care, and for which they receive ample re¬ 
muneration under their present ‘ released bill of lading.’ 

“ We are under the impression that your association already had this matter 
in hand, but we should like to know what has been and is being done, and 
an expression of opinion from you as to the probability of corrective measures 
being effected in the near future. 

“ In comments above we have not touched upon the option extended to 
every shipper to ship his goods on an ad valorem basis, because, as you are 


THEFT, ETC., OF EXPORT 1 AND IMPORT SHIPMENTS. 171 


well aware, freight on this basis, on most lines of merchandise, is prohibitive 
and can not be entertained. Furthermore, we do not believe that a carrier 
is in an, way justified in demanding freight on this basis on general cargo. 

The only other avenue of safety for the shipper under existing conditions 
to the insuring of his merchandise against theft and pilferage and against non¬ 
delivery, which, owing to the abnormal amount of losses due to causes already 
mentioned, the cost has advanced to an unprecedented figure, some insurance 
companies are no longer willing to underwrite this class of insurance, and it 
js well within the realms of possibility that a continuance of the use of the 
‘ released bill of lading ’ by the carriers may result to all insurance companies 
refusing to insure against theft and pilferage and nondelivery. 

“ Raiment of claims by steamship companies. —It is our understanding that 
the amount of the carriers’ liability is, under a ‘ released bill of lading,’ $100 
per package, and where ad valorem freight is paid the full value of tiie mer¬ 
chandise in Lnited States gold, and payment of claims should be made by 
the carriers in that currency by draft on New York, or in local currency con¬ 
verted at the rate of the day. Many of the steamship agents in Buenos Aires 
have been insisting upon their right to pay claims in Argentine currency at 
rates arbitrarily fixed by them, and in some cases have arrived at an arbi¬ 
trary amount, to be paid in Argentine currency without stating the conversion 
rate. It seems to us that there should be a clear understanding on this point 
with the steamship lines in New York, and the steamship agents in Buenos 
Aires be properly instructed, so that the consignee at this end will receive 
justice in this regard without the loss of time in disagreeable argument. 

“Steamship companies' obligation to revise packages at destination. —As you 
know, it is customary and obligatory upon the consignee, if he expects to col¬ 
lect insurance for pilfered goods, to request a revision by the steamship agents 
in Buenos Aires of packages which show by appearance or by weight that the 
package has been tampered with and merchandise extracted therefrom. It 
is our contention that no steamship agent is justified in refusing a request to 
make this revision and issue a certificate of his findings, particularly where a 
clean bill of lading has been issued for the goods at port of shipment. It has 
become almost common practice on the part of many of the steamship agents 
in Buenos Aires to refuse to revise packages on the ground that * old, used 
containers have been employed,’ ‘cases have not been properly strapped,’ ‘con¬ 
tainers are not sufficiently strong,’ etc. The fact that in most instances where 
vigorous protests have been made the steamship agents have revised goods sub¬ 
sequent to their refusing to do so does not alter the case. If it is the obligation 
of the steamship agent at port of desinaion to revise packages upon request, 
as we think it is, they should comply without attempt to evade responsibility, 
and we think that the steamship companies in he United States should so 
instruct their agents here. 

* * * * * * * 

“ With reference to theft and pilferage insurance, the insurance agents here 
almost universsally contend that this does not cover against loss of entire 
packages, claiming that nondelivery does not constitute theft. The distinction 
appears to he a very technical one, as if a package is placed on board steamer 
at port of shipment and is not delivered to the consignee, the goods have, as 
far as he is concerned, been stolen, whether they were delivered in error to 
another party by the steamship company and not returned or whether the 
entire package was actually stolen while in possession of the steamship com¬ 
pany. Still we are somewhat in sympathy with the insurance companies in 
their contention that the carriers should respond in full for such losses. How¬ 
ever. we should like to have from you an interpretation of theft and pilferage 
insurance, and whether‘or not this does cover loss of entire packages. 

“ Through one of the British trade papers we learn that shippers in the 
United Kingdom are insisting upon a uniform bill of lading, throwing respon¬ 
sibility upon steamship companies and common carriers for loss of entire 
packages, as well as for loss of contents of packages. 

“ The present practice not only encourages theft on part of seamen but 
virtually removes any incentive the steamship companies have for repressing 
pilferage. 

“ We have gone rather lengthily into matters which, as stated in the first 
paragraph, you are undoubtedly more or less familiar with, but the difficulties 
with which our members are contending are a hindrance to American trade, 
and we have no definite prospects of relief. The American Chamber of Com¬ 
merce has been occupying itself with these matters, and we are under the 


172 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


impression that some considerable interest is being taken in the United States, 
probably by your association.” 

We are pleased to note from your letter of July 27 that when the hearings are 
printed you will furnish us with a dozen copies. 

If at any time we can be of further service to your committee, we hope you 
will not hesitate to call upon us. 

Very truly, yours, 

American Exporters & Importers’ Association, 

E. C. Hines, 

Secretary to the Board of Directors. 

Mr. Lehlbacii. I understand that Mr. Herrick desires, briefly, to 
supplement his statement of yesterday. 

STATEMENT OE ME. CHAELES E. HEEEICK—Eesumed. 

Mr. Herrick. Mr. Chairman, in calling your attention last even¬ 
ing to the measures which the packers have taken to insure safe 
delivery in the way of better package and more expensive package, 
and so on, I neglected at the moment also to say that a number of 
the concerns, my own concerns among them, employ a checking 
system—employ representatives at the seaboard to tally these goods 
out of the car, to give us the seal record of the car. and to tally the 
number of boxes out of the car, so that we may. if possible, know 
whether the loss occurs on the inland haul or after the goods are 
discharged from the car to the dock or lighter. 

I also w T ant to say, if some of my friends here won’t consider it 
quibbling, that there have been prosecutions for pilferage. I would 
like to refer them to the case of United States v. Chapman et al., in 
New York. In that particular case I was in New York City one 
day, and on the bourse, and one of the gentlemen in the trade there 
said to me, “ What is the matter with your lard.” I said, “ I do nht 
know that there is anything the matter with it.” He said, “ Lard 
of your brand is being offered here at 2 or 3 cents under the market.” 
I said, “ We have not shipped any lard to New York for quite a 
period, and I do not understand why, if we had, it should be offered 
under the market. Possibly it is old lard that has been shipped a 
good many months ago which, on account of its present condition, 
is being offered low on the market. At any rate, I wish you would 
look into it.” 

What developed is this, from my recollection—I am speaking now 
only from recollection, because I have not the papers with me—about 
347 tierces, and in that connection I would like to call your attention 
to the fact that a tierce, I judge, contains approximately 360 pounds, 
net weight, of lard, and I think it was 347 tierces that had been 
stolen in New York Harbor. If I am correct as to the number of 
tierces, that would be a total net weight of nearly 113,000 pounds. 
That lard was taken in the harbor there and, as the evidence proved, 
was put in cold storage by the thieves in some 8 or 10 cold-storage 
warehouses, and it was then being offered on the bourse at 2 or 3 cents 
under the market. 

That case w T as prosecuted by the United States, by the way, and 
not by the shipowners or operators, and five men were sentenced to 
prison in connection with that particular theft. It developed that 
two of those men were operating a chain of restaurants, and the sup¬ 
position was that they were stealing this lard for use in their own 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 173 

business and that, in this particular case, they got such a large 
amount of it that they could not absorb it all in these restaurants and, 
therefore, were offering it for resale. 

The question, it seems to me, is a very idle one, to ask the shipper 
where this pilferage occurred. It must be evident to everybody that 
if we knew we would be successful in either prosecuting the thieves 
and thus breaking it up, or putting a stop to it, or else securing reim¬ 
bursement. But these goods are out from under our control; they are 
in the hands of the carriers, and to say the hour of the day or the 
particular employee of the carrier who commits this pilferage, is ask¬ 
ing certainly an idle question. 

In regard to this question of a reasonable time in which to present 
these claims, the gentleman has just referred to some of the bills of 
lading here and I notice in this first one that I looked at section 14 
provides that all claims for short delivery, loss or damage, of what¬ 
soever nature, must be made in writing to the steamer’s agent at the 
port of destination of the goods within five days after the steamer or 
lighter finished discharging; and always before—and that “always 
before ” is printed in capitals here—always before the goods are 
taken delivery of by the consignee—manifestly an impossibility. 

Until that consignee gets delivery of his goods, how in Heaven’s 
name is he to know that there is loss or damage of them? Now, that 
is a Red Star Line, New York to Antwerp bill of lading, operated by 
the I. M. M. 

Then the suggestion I think I made last night, but am not certain, 
that there should be full liability for loss or damage, except in the 
case of force majeur, act of God, etc. I do not know whether I 
stressed the point last evening, but I would like to do so now, if I 
did not, that in this question of surveys by Lloyds representative, in 
foreign ports, they arbitrarily fix the loss due to rough weather at 
such a percentage of the total loss, and the balance to pilferage. That 
absolutely estops the owner of the goods from securing, under his 
marine policy, anything more than the percentage which that par¬ 
ticular surveyor thinks, in his opinion, is the loss resulting from the 
rough weather. In some cases, the paper filed by the captain men¬ 
tions rough weather, but is entirely silent as to whether the cargo 
shifted and worked in the hold. Therefore, the owner of the goods 
is powerless to collect under his marine policy. I would like to lay 
special stress on that, that the Lloyds survey practically works as an 
estoppel for the collection of the insurance under the marine policy. 

Now, the interest of the foreign buyer is not in securing a certain 
number of dollars; he does not buy dollars; he does not buy francs 
or marks; he buys goods. And we assume he buys them because he 
needs them. He wants them, and the payment, therefore, of these 
sums does not to any extent placate him for the nondelivery of the 
goods, either partially or in entire packages. The shipments made 
by the packers are almost exclusively in carload lots and in refriger¬ 
ator cars. We had a case of the Triangle Steamship Co. of two car¬ 
loads of shoulders. We booked them for shipment to Antwerp. They 
notified the inland carrier to deliver those goods to their dock. The 
inland carrier did so. Either they were disappointed, or for some 
reason—at any rate, no boat appeared to take those goods. They 
were allowed to lie on the open dock in New York for a period of 
four weeks. 


174 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

There was no notice given to us that the goods were on the dock, 
and, as it develops, we have no recourse against them for the loss 
sustained. The delivery of goods, either by lighter or by car, to the 
steamship docks is very largely a matter of convenince to the boats 
themselves. They have a boat which is about to load at a certain 
dock and it certainly is to their advantage to have a certain amount 
of goods there that can be quickly loaded as soon as a ship is avail¬ 
able. But they assume, and so far have successfully combatted in 
the claims, that they are not responsible until those goods reach 
ship’s tackle; although, as in this case, they ordered the goods to the 
dock for their own convenience and profit, so as to have them ready 
when that boat appeared. Now, then, the inland line claims that 
it is impossible for them to know—and in that we must agree with 
them—that the ship is ready to load and when they receive orders 
from the steamship people to make delivery there, they feel that 
they have completed their part of the carriage. But, as I say, the 
steamship people will not assume liability until the goods reach 
ship’s tackle; but if there is no boat there naturally they can not be 
put at ship’s tackle. Now, that is the hiatus in there between the 
liability of the two carriers that I hope very much your committee 
will cover in this suggested legislation. 

Mr. Bentley. Mr. Chairman, may I say in reference to my re¬ 
marks last night that under the Harter Act there were some changes, 
one or two things in the phraseology rather on the constructive side, 
not destructive of the act. One is the question of notice where 
through the failure of the ship to make its final harbor and it dis¬ 
charges beyond the destination or discharges somew T here where the 
delivery can not be immediately effected. In our case. before the 
Interstate Commerce Commission, we stressed the necessity of giv¬ 
ing the shipper or consignee notice of the fact that those goods have 
been placed somewhere else than w T as intended. There is a question 
of claims. In the through bills of lading to-day, rail and ocean, 
10 months is allowed for filing of claim. In the domestic business it 
is six months. We placed the longer period of time of 10 months 
because a ship leaving the country going to some far distant point 
had to get the papers back to the shipper and manifestly the farther 
away you are the longer time it takes. We felt very strongly on 
that and I would like to indorse what Mr. Guiterman said, that there 
should be some delay permitted in the filing of claims for that period 
of time which will permit the documents to be returned and prop¬ 
erly handled. In other words, this restriction of giving notice before 
you leave the dock and all that should not restrain the shipper or 
whoever is the owner of the property from the opportunity to get 
his papers together and file claim within a reasonable time which, 
in this case, we hold is 10 months. 

I should like to add that to my testimony of last night. 

Mr. Lehlbach. Is there any other representative of the American 
Exporters and Importers’ Association who desires to speak on what 
Mr. Guiterman said in behalf of his association? If not,, we will 
proceed to call Mr. Baldwin. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 175 

STATEMENT OF MR. C. B. BALDWIN, TRANSPORTATION MANAGER 
UNITED SHOE MACHINERY CORPORATION, BOSTON, MASS. 

Mr. Baldwin. Mr. Chairman and gentlemen, when we heard of 
this proposed hearing we welcomed the opportunity of coming here 
because of the very great difficulty we have had in collecting claims 
from the steamship lines under the present conditions of the ocean 
bill of lading. I have here a sample of a bill of lading issued by the 
Emery Line, of Boston, which 1 think is a fair sample showing the 
conditions. There are 27 clauses all together and it frequently hap¬ 
pens that after the goods have been delivered to the steamer and 
the goods are in the hold and we receive our bills of lading back 
we find that there are rubber-stamped clauses which we are unable 
to have removed from the bill of lading, such clauses as “ Said to 
contain quantities unknown, etc.” 

To illustrate the difficulties that we have had because of these 
clauses, I might give just one instance : I remember that during the 
war we shipped to New York a quantity of steel to be exported to 
France. We? traced the car through to the dock and obtained a 
receipt from the receiving clerk, and later obtained a bill of lading. 
We sent these abroad, and after some months received word that 
the goods had never arrived. We traced the shipment vigorously 
and finally the steamship company notified us that it was impossible 
to show deliver and that they would honor our claim. We had 
prepaid freight to the amount of about $1,100 on that car of steel, 
and naturally in making our claim we included the $1,100, making 
a total of about $7,000. The claim was not declined by the steam¬ 
ship company, but it was ordered reduced by the steamship com¬ 
pany because of the fact we included the prepaid freight, and our 
attention was called to a clause in the bill of lading which we had 
admittedly overlooked. It states that the freight would be retained 
whether earned or not earned. The matter was referred to pur legal 
department, and it was finally put up to an admiralty lawyer in 
New York, and the opinion was rendered that we were absolutely 
helpless, that we should be obliged to reduce our claim by $1,100, 
although the investigation showed that this particular lot of steel 
was stolen from the dock in New York and never went aboard the 
ship, and it seemed to us manifestly unfair that we should be obliged 
to pay the steamship company $1,100 when apparently they had 
never transported the cargo. 

Of course, when those rubber-stamp clauses appear on the bill ol 
lading we naturally protest, and sometimes quite vigorously, and the 
steamship lines tell us it does not amount to much because we can 
always o-et insurance. But that is easier said than done; that is to 
say we are not always able to collect. I have in mind one occasion 
particularly of a shipment made to South America and covered by 
insurance, under the ordinary policy, which protects us from the 
perils of the sea. This particular shipment was damaged as the 
result of some other cargo being put on top of ours, and the goods 
were so badlv damaged that we found the goods worthless. 1 he 
claim was first put up to the steamship company, who stated that 
the insurance company was liable as it was the result or perils of the 
sea The claim was then put up to the insurance company, and the 
insurance company stated that the steamship company was liable 


176 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


because of improper stowage, and the correspondence went back 
and forth, and it was over a year before we were able to collect our 
claim. I think, if my recollection serves me correctly, that the insur¬ 
ance company finally paid the claim, probably for business reasons. 
It seems to us that it is high time that some kind of law or amend¬ 
ment was passed that would give ordinary protection to the exporter. 

Taking up first the question of the full actual value, the necessity 
of steamship companies being responsible, we at the present time, 
against one steamship line from Boston, have 12 claims, the total of 
which is $2,980.68. Of course, those are small claims, and the cost 
of the ocean freight insurance companies, etc., amounts to $326.26, 
and we are informed that, under the bill of lading clause, it is abso¬ 
lutely impossible to collect more than the actual invoice of the goods. 
In other words, although it has cost us $326 to put those goods or 
follow those goods to South America, we are unable to collect that 
expense, which seems to us unjust. Under the valuation clause we 
are limited to $100 per package. In making up our shipments we 
make up a miscellaneous or send forward a miscellaneous lot of 
goods. I think there are something like 127 commodities which we 
export, and one case may be valued at $50, another case at $500, and 
possibly another case at $1,000. In delivering 200 or 250 tons to a 
steamer it is pretty difficult to determine or to notify the steamship 
company of the value of every package and possibly obtain special 
insurance or pay an extra rate on those packages, and it seems un¬ 
fair from our standpoint to limit this to the value of $100 per case. 
At the present time I have in mind particularly two claims, one for 
$396.10, the value of one case, and another case valued at $1,392.62, 
and we are called upon to reduce those to a basis of $200, or a value 
of $100 per case. 

As regards the burden of proof in negligence, we have at the 
present time a claim against the Rew York Steamship Line fqr 
$180.05 for theft and pilferage. Now, as regards this particular 
claim, something very peculiar has developed, and I would like to 
read into the record a portion of a letter received from our office 
in Rio Janeiro, as follows: 

At the time of the discharge the boxes showed that they had been pilfered, 
so our customhouse broker made a petition for an examination, which petition 
was taken to the “ Cia Commercial e Maritima.” Rio agents of the steamship 
company, inviting them to be present at the official inspection. They absolutely 
refused to take any part, but as it is necessary for them to go on record on the 
documents of the inspection process and state that they have been advised, 
the papers were taken to them and carry their rubber stamp as also their 
acknowledgment of the advice of the official inspection. This is the legal notice 
they received and acknowledged and is all that is necessary. 

Further, for your information, the agents above mentioned are well known 
in Rio as absolutely refusing to take part in any official investigation, and to 
further our position and theirs in the matter, we inclose herewith copies of our 
two letters to them of March 21, as also their reply of March 24, in which 
they lay stress upon the point that in accordance with one of the clauses of 
the bill of lading, they are not responsible for the shortage, adding that inas¬ 
much as they did not assist at the official inspection they can not be responsible. 
However, the fact remains, they did not assist at the inspection simply because 
they would not, and even to-day they take the same position that they will not 
assist at any inspection. 

We, of course, filed our claim in New York with the agent and 
submitted it, and they declined because of no report from their agent 
in South America, and you can judge for yourself as to what instrnc- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 177 

tions may have passed between the agents in New York and the 
agents m South America. In other words, although we know that 
we have a loss we are unable to collect one cent from the steamship 
company because under the present act, as I understand it, the bur¬ 
den of proof is on the shipper or the consignee. We have another 
claim against a New York steamship company which has been de¬ 
clined for the reason of the rubber-stamp clauses that I have pre- 
V1 ™sly referred to which are said to contain a quantity unknown. 

if I may, I would like to read a letter from this New York steam¬ 
ship line. I find that I do not have it with me. but have it in my 
file and can submit it later if desired. 

As regards the time limit for presenting claims, we have several 
claims at the present time against the United States and Brazil Line, 
which have been declined because of the fact that the claim was not 
presented within three days after the arrival of the steamers. That 
was absolutely impossible for the reason that the goods did not come 
into our possession until 30 days after the arrival of the steamer, ac¬ 
cording to advices that we got from South America. I would like to 
read into the record the letter that we have from the United States 
and Brazil Line on this subject. 

Referring to our letter of March 16 regarding your claim No. 179, Steamship 
Opequan, for shortage of 11,000 eyelets, we beg to state that we have received 
advice from our Brazil office, and according to the landing of this material, your 
claim should have been entered on August 3. The official survey was not re¬ 
quested until August 26. 

Due to the above fact we must state that we can not recognize any claim from 
you, because your Rio de Janeiro office did not comply with the terms and condi¬ 
tions of the B/L. 

' We might state that the conditions apply against your claim No. 180 on 
the same steamer. 

Yours, very truly, 

United States and Brazil Steamship Line. 

H. J. Charlwood, G. F. A. 

It is manifestly unfair to expect the shipper to do something which 
it is physically impossible for him to do, as in this case, when the 
goods have not come into our possession and we have no idea of the 
damage that resulted. 

I thought I would give those facts, because it may be helpful in pre¬ 
senting some amendments which we believe are absolutely necessary if 
we are to continue in the export business. 

Mr. Lehlbach. You referred in the beginning of your statement to 
clauses rubber stamped on this bill of lading. Can you give us any 
idea as to the number of such clauses and their provisions ? 

Mr. Baldwin. I have made a memorandum of two only, which I 
have referred to. I know that at times we have had bills of lading 
returned that said we are not responsible for leakage, not responsible 
for damage by rust, and causes of that nature. There seems to be no 
uniformity on the part of the steamship companies in the matter of 
putting on these clauses. They appear on bills of lading when we re¬ 
ceive them and they are objected to and sometimes they are removed 
and sometimes not—more often not. 

Mr. Guiterman. You were asking about the terms of English bills 
of lading as compared with American. I was just looking it up. 

Mr. Lehlbach. Mr. Gaines asked the question. 

60683—21-12 


178 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Guiterman. I was just looking over the two English bills of 
lading from American ports. That does not prove that this is on the 
English bills of lading at other English ports, but these bills of 
lading in several respects are more liberal than the American bills 
of lading of other companies. Each one of these bills of lading has 
a £200 limitation instead of $100 limitation of damage per package; 
but on claims for short delivery they seem to be much more liberal. 
Here is one of the American-Australian routes: 


A claim for short delivery or of damage done to goods and all other claims 
whatsoever are to be presented at the office of the ship agent at the point of 
discharge within one month after the examination shall have been finished. 
Otherwise the claims shall be deemed to have been waived even though arising 
from negligence. 

Mr. Edmonds. That is the American-Australian Line? 

Mr. Baldwin. American-Australian under the British flag. 

Mr. Edmonds. Sailing from where? 

Mr. Baldwin. New York to Australasian points. 

Mr. Edmonds. A £200 limitation instead of $100 ? 

Mr. Baldwin. £10 per cubic foot or not more than £200. Those 
packages have 20 cubic feet or more. 

Mr. Kirkpatrick. Here is an Australian line that has £100 limi¬ 
tation and £5 per cubic foot for United States of America lines. 

Mr. Baldwin. That is better than the American. 

Mr. Fitzpatrick. Yes. 

Mr. Baldwin. Here is another, the Australian Commonwealth 
and Dominion Line that has £10 per cubic foot or £200 per package. 

Any claim for short delivery or of damage done to goods and all other claims 
whatsoever to be made at the port of discharge, and at no other port, and 
goods are shipped and bill of lading granted subject to this express condition. 


There is no time limit. In our American bills of lading you have 
got to give a notice before the goods leave the dock. I believe it is 
correct, as has been stated by others here, that notice has to be given 
before you leave the dock. 

Mr. Lehlbach. The committee will stand in recess until 2 o’clock 
this afternoon. 

(Thereupon, at 12.30 o’clock p. m., the committee recessed until 
2 o’clock p. m., Tuesday, July 19, 1921.) 

(The following statements were ordered printed in the record:) 


United Shoe Machinery Corporation, 

Boston, Mass., July 22, 1921. 

Hon. F. R. Lehlbach, 

Chairman Subcommittee Marine Insurance, 

House of Representatives, Washington, D. C. 

My Dear Sir : With reference to the proposed amendment to the Harter Act, 
I agreed at the hearing last Tuesday, July 19, to submit an additional memo¬ 
randum giving reference to certain rubber-stamp clauses which have appeared 
on export bills of lading. 

Your attention is respectfully invited to the attached memorandum, which, 
I think, is self-explanatory. 

Yours, very truly, 


C. B. Baldwin, 

Manager Transportation Department. 


clauses which have been rubber-stamped upon ocean bills of lading 

WITHIN THE LAST TWO YEARS. 


“The steamer can not be held responsible for shortages due to pilferage 
(whether effected by the company’s employees or not), which risk can be 
covered by an insurance company.” 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 179 


“ Steamer not accountable for loss or damage arising from frailty of 
packages.” 

“ Steamer not responsible for leakage.” 

“ Ship not responsible for breakage of glass.” 

“ Insufficiently protected, ship not responsible for chafing, torn, or mended 
wrappers.” 

“ Steamer is not responsible for loss or damage resulting from bundles 
becoming unfastened.” 

“ Steamer not accountable for breakage of unprotected packages.” 

“ Steamer not responsible for pilferage or loss of contents.” 

“ It is agreed that the liability of the steamer is limited to $100 per package 
or pro rata for partial loss of the package, and freight is charged on this 
basis.” 

Note. —On a bill of lading covering several classes of cargo some of the 
clauses relating particularly to a certain class are so placed that they apply to 
the whole bill of lading and not to the particular class which they are intended 
to cover. This gives the steamship company release from responsibility on the 
whole bill of lading, which is very unfair to shipper. 


United Shoe Machinery Corporation, 

Boston, Mass., August 3, 1921. 

Hon. Frederick R. Lehlbach, 

Chairman Subcommittee on Marine Insurance, 

House of Representatives, Washington, D. C. • 

My Dear Sir: Supplementary to my letter of July 22, to which you replied on 
July 26, I am inclosing another set of ocean bills of lading. 

In order that you may be advised of recent changes, I would invite your at¬ 
tention to rule No. 3 as printed on the bill of lading, which for convenience I 
have marked “ No. 2,” in order that you may note the change which has been 
made very recently. This is rule No. 1, as shown on the bill of lading, which I 
have marked “ No. 1,” revised. 

In the light of recent developments it appears to us as high-handed procedure 
to insert a clause in a new form of bill of lading without any notice, which we 
are compelled to use, which makes it practically impossible, in tbe event of loss, 
to collect more than $15 in some cases. This is really what it means, notwith¬ 
standing the fact that the limitation is placed at $150, for it frequently happens 
that a package will not measure more than 1 cubic foot or 1^ cubic feet. It is 
my understanding that certain lines operating out of New York have placed 
the limitation at $8 per cubic foot. 

As regards the bill of lading which I have marked “No. 3,” I would respect¬ 
fully call your attention to clause S, from which you will see that if the exact 
wording of this clause is enforced in the case of loss and damage we can collect 
but little, if anything, from the steamship company. This, of course, tends to 
make the insurance rates very high, and it is quite probable that in time we 
shall be unable to secure full protection from any insurance company. 

Yours, truly, 

C. B. Baldwin, 

Manager Transportation Department. 


The bill of lading sections to are as follows: 

Rule 1 of the Leyland Line (Boston to Liverpool), bill of lading marked 
“ No. 1 ” : 

“ l. It is also mutually agreed that the value of each package receipted for 
as above does not exceed the sum of $100 unless otherwise stated herein, on 
which basis the rate of freight is adjusted.” 

Rule 3 of the Leyland Line (Boston to Liverpool), bill of lading marked 
“ No. 2 ” : 

“3. Also, it is also mutually agreed that unless a higher value be stated 
herein and declared herein to be the basis of adjustment of freight, the value 
of any package shipped hereunder does not exceed $150 per package, nor $15 
per cubic foot, nor $30 per hundredweight, and the freight thereon has been 
adjusted on tbe basis of such valuation. In computing any liability of the 
carrier in respect of the goods, no value shall be placed thereon higher than the 
invoice cost, not exceeding $150 per package, nor $15 per cubic foot, nor $30 per 



180 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


hundredweight (or such other value as may be stated herein as the basis of 
freight), nor the proportionate part of such cost and value, in case of any 
partial loss or damage.” 

Clause 8 of the Boston-Buenos Aires Line bill of lading: 

“ S. Unless a higher value be stated herein and upon the dock receipt sent 
to the dock with the goods, the value of the goods does not exceed $100 per 
package or piece, and the freight thereon has been adjusted on such valuation, 
and no oral declaration or agreement shall be evidence of a different valuation. 
In computing any liability of the company in respect of the goods, no value 
shall be placed thereon higher than the invoice cost (including freight prepaid 
hereunder) not exceeding $100 per package for such other value as may be 
stated herein). In case of a partial loss or damage the steamship company 
shall not be liable for more than such proportion of the same as $100 or the 
value declared bears to the actual value. Nor shall the company be held liable 
for any profits or increase of price or value over such cost not exceeding said 
value, nor for any special or consequential damage or commission, profit, inter¬ 
est, duty, storage, landing or other similar charges, and the company shall 
always have the option of replacing any lost or damaged goods. In case of any 
loss or damage for which the company shall be liable the company shall to the 
extent of such liability have the full benefit of any insurance that may have 
been effected upon the goods or against said loss or damage, and as well also 
of any payment to insured by underwriters repayable only out of recovery 
against the company, notwithstanding the underwriters are not obligated to 
make such payment. The company shall not be liable for any loss or damage 
unless written notice of claim be presented in writing to the company within 
90 days after delivery of the goods to the company, nor unless suit therefor is 
commenced within six months after delivery of the goods to the company, and 
the lapse of such period shall be deemed a complete bar to recovery in any such 
suit or proceeding not sooner commenced, notwithstanding the company may 
be a nonresident or a foreign corporation. Nothing shall be deemed to waive 
the provisions of this clause except a written express waiver signed by the com¬ 
pany. Any claims for loss or damage by short delivery or otherwise arising out 
of this bill of lading shall in the option of tbe company be dealt with in New 
York according to the laws of the United States of America to the exclusion of 
proceedings in the courts of any other country.” 

AFTER RECESS. s 

The subcommittee reassembled at 2 o’clock p. m., pursuant to 
recess. 

Mr. Edmonds. The committee will come to order. 

The first witness, I believe, is Mr. Hill. Is he present? You may 
proceed, Mr. Hill. 

STATEMENT 0E MR. W. J. HILL, REPRESENTING THE CLEVELAND 

WORSTED MILLS CO. AND THE CHAMBER OF COMMERCE 0E THE 

CITY OF CLEVELAND, OHIO. 

Mr. Hill. Mr. Chairman and gentlemen of the committee, the 
Cleveland Worsted Mills Co. embarked on an export business some 
seven years ago, and during that time they have developed their 
business in all parts of the world. 

When the war came on the policy of the company was declared to 
be to pursue such markets as we were hoping to continue and to 
hold after the war was finished. Consequently we developed the 
markets in which the United States was most vitally interested—the 
markets of the Caribbean, of Hawaii, of the Philippine Islands, of 
Latin America, of China, and of Japan. And during the war the 
experience of our company was such that the losses which we suf¬ 
fered from theft and pilferage and nondelivery were so great as 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 181 

almost to make us give up the export business. Since the war those 
claims and losses through those causes have increased rather than 
decreased, and at a time when exporters, manufacturers, and others 
who export merchandise are in the greatest need of assistance, they 
find themselves confronted with this matter of loss through pilfer¬ 
age, through nondelivery by steamship companies, and it is so 
serious that it is almost a question as to whether they shall con¬ 
tinue in the export business. 

The cessation of exports to-day, when we need exports, when we 
need to export merchandise—the cessation of any exports would be 
nothing less than disastrous. This country needs exports. We need 
to export in order to continue to employ the number of people in 
this country which are employed in manufacturing centers 

The lines chiefly of manufactured goods have been the most sub¬ 
ject to theft and pilferage, and the causes of this theft and pilferage, 
as I see it, are not only in the United States, they are in Latin 
America, they are in Europe, they are world-wide. They are not 
confined to any one country. It is a disease, apparently, that has 
spread the world over. The predatory elements of all populations 
have seemed to spring up and to help themselves to anything that 
they could get their hands on, so long as it was merchandise that 
could be used. 

The amount of theft and pilferage that we have experienced in 
our domestic business will be of interest to you, because this ques¬ 
tion is not only one relating to foreign exports but it is also one re¬ 
lating to our domestic business. 

I have here a statement which was hastily compiled, because of the 
short notice which we had of this meeting, showing our outbound 
freight, the claims which we have paid to three railroad companies— 
the Pennsylvania Railroad Co., the Erie Railroad, and the Balti¬ 
more & Ohio Railroad Co. In the 10 years from 1903 to 1913 our 
total claims against those railroad companies amounted to $7,000, 
or an average of a little over $700 per year. In the year 1916 our 
claims against those railroad companies were three times what they 
were for the total 10 years previous. In other words, they amounted 
to $22,000 for the year 1916. 

For the five years 1916 to 1920, inclusive, our total claims for inter¬ 
state loss were over $90,000.78, showing that this theft and pilferage 
business was not confined only to the export trade but was also tak¬ 
ing place in the interstate trade which we do. 

Our company is a large one and we do many millions of dollars of 
business, but the difficulty that we have as exporters is this, that 
whereas our Government has been pleased to recognize a uniform bill 
of lading on the railroads, and bur claims being presented to these 
railroad companies have been met by the railroad companies and 
have been paid, and we have been satisfied. That is the smallest 
part of it, because the claim itself, the monetary consideration, is a 
consolation merely; what our customer requires is the merchandise 
itself. But when we come to export business and there are claims for 
theft and pilferage after the merchandise leaves New York, we have 

no remedy. . 

I have in my hand a list of claims coming under various heads. 
List A is a list of claims for theft and pilferage. That is, mer¬ 
chandise, where a case or a box has been broken into and some- 


182 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


thing has been abstracted from it. In all those instances on this 
Exhibit A there is no question that that theft and pilferage Avas done 
after the merchandise left New York. 

For your information, sir, I may say that the Cleveland Worsted 
Mills Co. do not buy their boxes nor do they use any second-hand 
boxes. We make our own boxes and we make them of wood such as 
you would scarcely believe, so good and so fine is it. It is inch and 
a quarter wood. The boxes are double cleated. That is to say, they 
have straps of wood around them twice, and in addition to that they 
have a wire seal right around the whole box. So we have taken all 
the possible care that we could in making up our own boxes and in 
making our merchandise secure before it leaves our own factory. 

In this list B, Exhibit B, I have 12 instances of what is termed 
“ nondelivery.” Nondelivery is a case of merchandise being accepted 
by a steamship company and the steamship company failing to de¬ 
liver the same. In all of those cases the steamship company have 
recognized that they have accepted the merchandise but are unable 
to prove delivery, and when the matter is taken up with them they 
refer you to clause No. 21, which clause, I think in most bills of lad¬ 
ing—it is in several I have here—provides that they are limited in 
their liability to $100. 

Now, gentlemen, I do not say that steamship companies are any 
worse than anybody else, but I would draw your attention to the fact 
that in the case of the railroad claims we were paid in full and could 
satisfy our customers in full, but when it came to the case of a steam¬ 
ship company accepting merchandise and being responsible for it, 
then they decline the responsibility b}^ saying that they are limited by 
the liability clause No. 21 to $100. The steamship companies have 
been under a difficult situation. 

Mr. Edmonds. Did you sign those bills of lading and did you object 
to them at that time? 

Mr. Hill. We have no option, sir, because certain steamship com¬ 
panies operate certain markets, and you have to take the steamship 
companies that are running to those markets, and the bill of lading is 
j^rinted, and you have to accept it as they make it out. 

Mr. Edmonds. You knew that it was in there when you signed it? 

Mr. Hill. Yes; we know it, but we have no other option. 

The steamship companies have themselves been in a difficult situa¬ 
tion. During the war they have had help and employees that were 
not amenable to discipline, and we can very well understand that not 
being amenable to discipline they were not disciplined, and, conse¬ 
quently, when employees are not disciplined, they do as they like. 
They took merchandise and stole it and sold it and converted it into 
money. We know this. It is common knowledge. 

The consequence of all this is that any reputable manufacturer or ex¬ 
porter who insures his merchandise has found that he is up against an 
extraordinary proposition with the insurance people. Up to last year 
the average premium for theft and pilferage for Latin America, in¬ 
cluding nondelivery, was approximately from five-eighths to 1 per 
cent. That included all risks. To-day the average premium is be¬ 
tween 5| and 6 per cent, and in some cases it runs to 10 and 11 per cent 
of the value of the merchandise. I know of no stable manufacturing 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 183 


business that will stand any such premiums as the 5 to 11 per cent that 
is demanded by insurance companies to-day. 

I hand you herewith Exhibit A showing you a schedule of rates 
existing last year and the rates for the same service demanded to-day 
by one of the best insurance companies in this country. That will 
show you the difference between the rates existing and the rates that 
were previously existing. 

Mr. Edmonds. I would like to have you put both of those into the 
record. 

Mr. Hill. This gives the names of the customers, the number of 
the bale or case, the steamship company, and all the information. I 
have no objection whatever to these going into the record. 

Mr. Edmonds. They will be put into the record at this point. 

(The papers referred to follow:) 

Exhibit A. 

Schedule showing new and old 1 'ates attached to policy No. 10451. 


[Commodity: Manufactured woolens in bales and cases. Insured at and from Cleveland. Ohio, bv rail 

to New York.] ' 

YEAR 1919-20. 


New York to— 

Marine 

insur¬ 

ance. 

Theft 
and pil¬ 
ferage. 

Total. 

i. Vera Cruz. 

SO. 20 
.30 

Per cent, 
h 
! 

2 

$0.70 
1.05 
2.33 
.39 
.85 
1.45 
.03 
.02 
. 03 

2. Merida, Yucatan. 

3. Mexico City. 

,14 5 

4. Habana, Cuba. 

i 

h 

1 

5. Barranq'uilla, Colombia. 

.35 

6. Buenaventura, Colombia. 

.45 

7. Bogota, Colombia. 

• 01| 
.50 

n 

n 

2 

8. Peru..'. 

9. Bolivia, Ecuador. 

.01 

10. Valparaiso, Chili. 

.55 

2 

2.55 

11. Brazil... 

.30 

4 

.80 

12. Argentina. 

.40 

4 

.90 

13. Porto Rico. 

.22 

i 

1 

. 47 

14. Central America. 

.50 

1.05 

.62 

15. Philippines. 

.37 




TO-DAY’S RATES. 


New York to— 

Marine 

insur¬ 

ance. 

Theft 
and pil¬ 
ferage. 

Nonde¬ 

livery. 

Total. 

1. VeraCruz. 

$0.20 

Per cent. 

1 

Per cent. 

1 

$2.20 

2. Merida, Yucatan. 

.30 

li 

3* 

3* 

2 

U 

3* 

3£ 

2 

3.30 

3 Mexico Citv. 

.33 

7.33 

4 Habana, Cuba. 

.14 

7.14 

5 Barranquilla, Colombia. 

.35 

4.35 

6. Buenaventura, Colombia. 

.45 

2i 

3* 

3| 

5 

2 h 
3£ 
3* 

5 

5.45 

7 Bogota, Colombia. 

1.50 

8.50 

8. Peru . .. . 

.50 

7.50 

9. Bolivia, Ecuador. 

1.00 

11.00 

10. Valparaiso, Chili. 

.55 

3} 

2 } 
2h 

1 

H 

2 4 
2i 

1 

7.50 

11. Brazil. 

.30 

5.30 

12. Argentina. 

.40 

5.40 

13 Porto Rico. 

.22 

2.22 

14 Central America. 

.50 

2\ 

1 

2 h 

1 

5.50 

15 Philippines. 

.37 

2.37 






















































184 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Exhibit B. 

GOODS STOLEN OR PILFERED IN TRANSIT. 

1. Case 7181: Pilferage value, $214.88; stolen in transit; steamship company 

refuse to pay. 

2. Case 6649: Pilferage value, $1,610.06; stolen in transit; steamship company 

refuse to pay. 

3. Case 7145: Pilferage value, $1,519.20; stolen in transit; steamship company 

refuse to pay. 

4. Bale 6648: Pilferage value, $338.61; stolen in transit; steamship company 

refuse to pay. 

5. Bale 7216: Pilferage value, $421.88; stolen in transit; steamship company 

refuse to pay. 

6. Bale 7634: Pilferage value, $320.13; stolen in transit; steamship company 

refuse to pay. 

7. Case 8147 : Theft and pilferage value, $280.50; stolen in transit; no settlement. 

8. Case 6871: Theft and pilferage value, $376.64 ; stolen in transit; no settlement. 

9. Case 6870 : Theft and pilferage value, $270.88 ; stolen in transit; no settlement. 

Exhibit C. 

GOODS LOST OR SHORT DELIVERED BY STEAMSHIP COMPANIES-CLAIMS FROM JANUARY 

TO APRIL, 1921. 

Bale 6104, lost or short delivered by United Fruit Co., value $350. .United 
Fruit Steamship Co. paid $25.33 in full discharge. 

Bale 5062, lost or short delivered by United Fruit Co., value $600. United 
Fruit Co. offered $100 in full settlement. 

Case 6914, lost or short delivered, value $1,700. Steamship company offers 

$ 100 . 

Case 6749, lost or short delivered, value $3,400. Southern Pacific Steamship 
Co. offers $100 in full settlement. 

Bale 7631, lost or short delivered, value $494.92. United Fruit Co. offers $100 
in full settlement. 

Bale 6993, lost or short delivered, value $500. Ward Line offers $100 in full 
settlement. 

Bale 6624, lost or short delivered, value $443.56. United Fruit Co. offers 
$38 in full settlement. 

Case 7596, lost or short delivered, value $1,300. Ward lane offers $100 in full 
settlement. 

LIST A, THEFT AND PILFERAGE—CLAIMS FROM JANUARY TO JULY, 1921. 

Angulo & Torano, Habana; Case 7181, Lake Fischer , October 4, 1920; insur¬ 
ance company paid $214.88; 1 piece stolen while in transit from New Orleans 
to Habana. 

Rafael Perez, Habana. Cuba: Case No. 6649, Pastores, May 27, 1920; insur¬ 
ance company paid $1,610.06; 5^ pieces of goods stolen while in transit from 
New York to Habana. 

Perez, Alea & Co., Santiago, Cuba: Case 7145, Lake Wimico, October 8, 1920; 
insurance company paid $1,519.20; 7 pieces stolen while in transit from New 
Orleans to Santiago. 

Stella, Hnos, Barranquilla, Colombia: Bale 6648, Tivives, May 21, 1920; in¬ 
surance company paid $338.61; 3 pieces stolen while in transit from New 
Orleans to Barranquilla. * 

De ltosa & Davino, Cali, Colombia: Bale 7216, Parismina, October 25, 1920; 
insurance company paid $421.88; 2 pieces stolen while in transit. 

Malluk Hermanns, Cartagena: Bale 7634, Lake Gilboa, November 12 1920; 
insurance company paid $320.13; 3 pieces stolen while in transit. 

Garcia & Dominguez, Habana: Case 6916, Lake Fischer , November 12, 1920; 
amount claimed for $1,350; apparently lost after landing in Habana. 

Alvarez Menendez & Co., Habana: Case 6747, steamship Excelsior , Southern 
Pacific, June 14. 1920; amount claimed for to insurance company, $977.78; 
stolen in transit from New' York to Habana. 

Henrique Helphen & Co.. David, Panama: Bale 8147, Carrillo , January 21, 
3921; amount claimed for $280.50; 3 pieces pilfered while in transit; claim 
presented to United Fruit Co. 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 185 


M. Bellon & Co., Mexico City: Case 6871, Gonzaba, October 2, 1921; amount 
claimed for $376.64; 5 pieces pilfered in transit. 

P. Ricahaud & Co., Puebla, Mexico: Case 6870, Gonzaba, October 2, 1920; 
amount claimed for $270.88; 3 pieces stolen while in transit from New Orleans 
to Vera Cruz; Gulf Line. 

Rivera & Co., Cartago, Costa Rica: Case 7976, ZJlua, December, 1920; amount 
claimed for $225.16; in transit from New Orleans; 3 pieces stolen. 

Enrique Gallego, Mexico City; Case 7905: Steamship Munorway; amount 
claimed for $1,382; in transit from New York to Vera Cruz. 

LIST B, NONDELIVERY—CLAIMS FROM JANUARY TO JULY, 1921. 

Pelaez & Caicedo, Cali. Colombia: Bale 6104, Carrillo , February 23, 1920; 
insurance company paid $350; steamship company paid to insurance company 
$25.33; bale lost by United Fruit Co. between New York and Colon. 

Juan Rosero, Pasto, Colombia : Bale 5062, Turrialba, April 25, 1919 ; insurance 
company paid $600; steamship company acknowledged liability of $8 per cubic 
foot, not to exceed $100; bale lost by United Fruit Co. between New York and 
Colon. 

Roman Martinez Hnos, Santiago. Cuba: Case 6914, Korsfjord; insurance 
company paid $1,700; steamship company offered $50; case lost by steamship 
company between New Orleans and Santiago. 

Rafael Perez, Habana, Cuba: Case 6749, Excelsior , June 12, 1920; insurance 
company paid $3.400; Southern Pacific lost case between New Orleans and 
Habana; offered $50 in settlement. 

Gomez Hermanos, Cartagena, Colombia: Bale 7361, La,Ice Wimico, November 
24, 1920; amount claimed for to insurance company, $494.92; United Fruit Co. 
lost bale in transit to Cartagena; offered about $50 to settle. 

Diez & Co., Vera Cruz, Mexico: Bale 6993, Neptune, August 24, 1921. voyage 
16; amount claimed for to insurance company, $500; Ward Line lost bale in 
transit to Vera Cruz; offered about $50 to settle. 

Block Hermanos, San Salvador: Bale 6624, Calamares, May 22, 1920; amount 
paid by insurance company, $443.56; amount paid by steamship company to in¬ 
surance company, $38; United Fruit Co. lost bale in transit from Colon to 
Salvador (Pacific Mail). 

Javelly & Rieliaud, Guadalajara, Mexico: Case 7596, October 19, 1920, Helmer 
Morch; amount claimed for, $1,300; steamship company lost bale in transit; 
offered $50 to settle. 

Jose Grimaldi, San Salvador: Bale 7847, Calamares , November, 1920; amount 
claimed for to insurance company, $1,032.04; steamship company offers to settle 
for $50; bale lost in transit. 

Francisco J. Pimiento, Barranquilla, Colombia: Bale 7848, nondelivery, 
steamship Lake Gilboa; amount claimed for, $800; Tropical Steamship Co. lost 
bale in transit; offers to settle for 50/100. 

Signoret & Reynaud. Mexico: Case 7588, Helmer Morcli , November, 1920; 
amount claimed for to insurance company, $2,800; New York & Cuba Mail Steam¬ 
ship Co. offers to pay 50/100 to settle. 

Enrique Gallego, Mexico: Case No. 3, Wacouta, $800; lost by steamship com¬ 
pany, New York & Cuba Mail Steamship Co.; no settlement offered as yet by 
steamship company. 

We have no record of losses or theft in shipments insured under consignee’s 
own open policies. The above claims refer to shipments insured by ourselves. 

We have several tracers on other shipments which as though deliveries have 
not been made by steamship company, but have no documents yet. 

Mr. Hill. In regard to nondelivery, this is the record of our claims 
of outward-bound freight, showing you the increase in claims—rail¬ 
road claims—on our domestic business only. 


186 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


(The paper referred to follows:) 

Outbound only railroad claims. 



Pennsylvania. 

Erie. 

Baltimore & 
Ohio. 

Total. 

1903 . 

$35.43 

$116.95 


$152.38 

1904 . 

598.33 

87.37 


685.70 

1905 

143.03 


143.03 

1906. 

572.64 
2,028.52 
488.45 


$4.50 

577.10 

1907 

325.85 


2>, 354.37 

1908 . 


488. 45 

1909. 

145.50 


8.00 

145.50 

1910. 

305.87 

257.04 

43.59 

606.50 

1911. 

308.36 

91.55 

202.50 

602.41 

1912. 

1,649.89 

135.97 

192.71 

1,978.57 

1913. 

1,122.87 

15.15 

40.72 

1,178. 74 

1914 . . 

1,236.07 

41.82 

62.63 

1,298.70 
455.20 

1915 . 

413.38 


1916. 

3,245.72 
9,631.76 
954.62 

1,999.21 

16,947,27 
2,039.10 
6,804.80 
3,347.88 
3,277.67 

22,219.20 
12,264.44 
10,161.46 
14,648.59 

1917. 

593.68 

1918.... 

2,402.04 
6,786.27 
6,937.26 
638.31 

1919. 

4,514.44 
20,560.16 

1920. 

30,775.09 

3,629.31 

1921. 

2.724.27 

264.73 



Mr. Hill. On merchandise that is overcarried or nondelivered the 
question is very serious. It seems to us so serious that unless we 
can have some guaranty as manufacturers and exporters—that unless 
we can have some guaranty that when we pay our money the re¬ 
cipients of that money shall be responsible for whatever they under¬ 
take—the railroad companies of this country are responsible when 
they accept freight and the freight is paid; the coastwise vessels are 
responsible likewise, and anybody who accepts merchandise and 
accepts money for taking care of that merchandise, or to undertake 
delivery of that merchandise, is responsible, and I think that the 
time has come when steamship companies should be no different in 
that respect than any other companies. It is common law, and the 
introduction of this clause 21 is simply the defeat of common law. 
It defeats the purpose of a man accepting money and a steamship 
company accepting rates provided for service to be done. The 
services are not done and they are held through this clause 21 to be 
free from liability. 

Another point that I would like to make is this, that if a com¬ 
pany accepts merchandise and does not deliver it, as in the case of 
that exhibit, where we have at least, I think, 12 cases of merchandise, 
each case being over the value of $1,000, and in some cases running 
to $3,000, for the steamship company to turn around and say, “ We 
are sorry; we have traced this merchandise but can not prove de¬ 
livery. Our liability is $100”—for them to do that, sir, is, to say 
the least, evading responsibility, and the matter has been tested—we 
have had it up with our counsel, and counsel informed us that we 
have no remedy; that if we accept this bill of lading as it is that it 
is good law. Therefore we must ask for a change of the law and 
must ask that the carrier shall be put in a position as other indi¬ 
viduals ; that it shall not be possible for him to make it profitable to 
not deliver merchandise and pay a minimum amount under his 
liability clause. 

As individuals, sir,, as a firm, we have done all that we possibly 
could. We have watched our shipments from Cleveland, Ohio, to 






































THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 187 


New Tork; we have watched them from the terminal to the steam¬ 
ship ; we have covered them absolutely as far as possible, and in spite 
of all the care that our firm can take we have not been able to prevent 
these enormous losses which our company has sustained. 

This morning I heard various gentlemen who were speaking in 
regard to their claims, and I have one before me in regard to a case 
of merchandise that was not delivered to the port of Vera Cruz, and 
this is a letter received from the steamship company: 


From the Ward Line, 

- . New York, July 2, 1921. 

Claim 20, S. S. Monterrey, voyage 238. 

Messrs. J. D. Smith & Co., 

17 Battery Place, New York City. 

Gentlemen : In reply to your favor of the 27tli ultimo, with reference to 
the above claim, which covers the alleged short delivery at Vera Cruz of one 
case of woolen piece goods, marks, A. L. S. & Co., Mexico City, D. F., 8062, 
exceedingly regret to advise that our efforts to date to locate this case have 
been unsuccessful. The case appears to have been duly loaded into the steamer 
and our tracers to other points of call have failed to locate this case. We are 
therefore of the opinion that the alleged nondelivery is due to the contents of 
the case having been stolen and the casing broken up, leaving no trace, and 
as we believe that your insurance covering this shipment included the risks of 
pilferage and/or theft, we would respectfully suggest that this subject be 
brought before the attention of your insurance underwriters, who, if they deem 
it necessary, will take up the matter with us directly. 

Yours, very truly, 

William Imlay, General Claim Agent. 

Per H. H. Jennings. 


There is a direct case in which they acknowledge their liability; 
they acknowledge having received the merchandise, and the total 
amount that the insurance company can collect from this steamship 
company is $100. The value of that case is $2,320. 

I do not want to seem unduly severe with the steamship companies. 
They have their troubles, but I do want it to be laid down axiomati- 
cally that if the steamship company accepts freight and charges its 
price for the certain service of carrying and delivering that freight, 
that responsibility shall go therewith. That is the point that we all 
feel should be clear. 

There is one other point that I would like to make, gentlemen, 
and that is that the collection of our claim, if we are successful even 
in collecting it, is a very poor satisfaction to our customer. He does 
not want the money; what he wants is the merchandise; and when 
he fails to receive that, if we are successful in obtaining payment 
of the claim it is merely consolation, and nothing else. It does not 
by any means cover his loss of profit or the money that he might 
have made had he received the merchandise. 

For your information—and I would like to be as fair as possible— 
I would draw your attention to the fact of the improvement in the 
situation. There is an improvement this year. Apparently the 
criminal gangs are being controlled to some extent, because our 
total claims on our interstate commerce here only are up to date 
$3,629, as against practically $12,000 for last year. 

Mr. Edmonds. Are you doing as much business? 

Mr. Hill. We are not doing as much business, but we have*done 
within 75 per cent of it this year of what we did last year. 


188 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Edmonds. Has there been any improvement in the ocean 
carrier situation? 

Mr. Hill. That is very hard to say. because the ocean business, 
the foreign business, has been so small. Practically since the end 
of December we liaA^e shipped no merchandise abroad. 

Mr. Edmonds. Is that on account of your insurance rates being 
so high? 

Mr. Hill. One of the chief reasons is that the merchants have 
been stung, shall I say—to use an inelegant phrase—have been 
“stung” by the losses that they have sustained through theft and 
pilferage, and they do not want any more merchandise if they are 
going to be penalized by suffering a loss by theft and pilferage. It is 
true that other nations have the same difficulties as we have, but 
they are able to get more from the steamship companies and more 
from other companies than are American merchants and manufac¬ 
turers. 

I believe that if we are going to maintain our export business; if 
we are going to anything like maintain it, we have got to not only 
have a square deal ourselves, but we have got to give our customers 
a square deal in regard to this theft and pilferage business. It has 
got beyond the control of any one merchant or any one manufac¬ 
turer, and therefore it is with pleasure that I see that the Govern¬ 
ment is taking hold of this thing, because it has grown to such 
dimensions that only the Federal Government can do anything in 
the matter. 

I think that is about all the testimony that I can give. If there 
is anything else that I can be of service to the committee on at any 
time or in any way I shall be very glad to give figures or procure 
figures for you. 

Mr. Edmonds. Does any gentleman desire to ask any questions o^ 
the witness? 

Mr. Kirkpatrick. I want to ask one question. Do you insure all 
these foreign shipments now? 

Mr. Hill. We do. 

Mr. Kirkpatrick. You do not ship anything that is not insured? 

Mr. Hill. No; we do ship stuff that is not insured. 

Mr. Kirkpatrick. What percentage of the foreign shipments do 
you insure? 

Mr. Hill. Probably 75 per cent of the foreign shipments we in¬ 
sure for the customer’s risk. But do you know how that works 
out? 

Mr. Kirkpatrick. No; I do not. I would like to know. 

Mr. Hill. May I take the committee’s time for one moment to 
explain ? 

It works out like this, gentlemen: If you are in Peru, for example, 
and you order merchandise from me and you instruct me to in¬ 
sure it and I ship it and you do not receive it, you send me back 
the papers and you tell me to collect the insurance. In other 
words, you do not pay for the merchandise at all; you leave it up 
to me to collect the insurance. Even though it be clearly under¬ 
stood that the merchandise is sold f. o. b. New York, it does not 
make'any difference; the customs of the trade, the sentiment in the 
country and of the customer is such that he says, “Here are the 
papers, now collect the insurance.” 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 189 


Mr. Kirkpatrick. About 25 per cent you do not insure? 

Mr. Hill. About 25 per cent we do not insure. That is left to the 
customer’s open policy. 

Mr. Edmonds. Does the customer insure in that case on an open 
policy ? 

Mr. Hill. They have their own open policy in that case. In such 
cases we demand a written statement from them saying that they 
have their own open policy number so and so with such and such a 
company, in order that we may know for sure. 

Mr. Edmonds. Then they are all insured, virtually ? 

Mr. Hill. They are all insured. 

Mr. Edmonds. The whole 100 per cent is insured one way or the 
other ? 

Mr. Hill. Yes, sir. 

Mr. Koines. You said that you began to strap and wire your boxes 
at a certain time. Do you know when you began that practice? 

Mr. Hill. We have done that practice from the time we com¬ 
menced the export business—always. We have also made our own 
cases and our own boxes, and we have also strapped them. 

Mr. Loines. Have you so far suffered more from nondelivery of 
packages or from pilferage? 

Mr. Hill. In value of money from nondelivery, because then the 
whole case goes, while in the case of pilferage only part of the case 
is stolen. 

Mr. Hickox. May I ask one or two questions ? 

Mr. Edmonds. Yes, sir. 

Mr. Hickox. In the case of this package that was valued at $2,300, 
did you declare the value to the carrier when you got your bill of 
lading? 

Mr. Hill. No; we do not. It is not our custom to do so unless it 
is specified by the customer, or unless there is some special reason 
for doing so. 

Mr. Hickox. And you have the option under your bill of lading 
of declaring the value and paying freight accordingly, have you not? 

Mr. Hill. All of our merchandise is first-class freight. We are 
manufacturers of fine worsteds, worsted cloth, and all of our mer¬ 
chandise is exported and accepted by the shippers as first-class freight, 
and we pay the first-class rate. 

Mr. Hickox. The question I asked was that if you had declared 
the value you had the option of declaring the value and paying freight 
on it, did you not? 

Mr. Hill. The question of the option of declaring the value is 
one that sometimes arises. It has never been customary to do so. 

Mr. Hickox. No; but what I want is the fact of whether under 
the bill of lading you could have done it if you wished to do so? 

Mr. Hill. We could have done it if it had been demanded, but 
paying first-class freight as we do, we do not believe it is necessary 
to take further precuations than that. We think that is sufficient. 

Mr. Hickox. Just one thing more. In what countries do you find 
that the shippers receive a greater amount from the steamship com¬ 
panies in the event of loss, nondelivery of packages, than they do 
in this country? 

Mr. Hill. I did not get that question clearly, sir. 


190 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Hickox. You stated that in other countries merchants got 
more from the steamship companies on claims for damage and 
short delivery than they do in this country? 

Mr. Hill. Yes, sir. 

Mr. Hickox. I ask you in what countries is that true ? 

Mr. Hill. In England, for instance. I think the English bills of 
lading, so far as I have seen them—and I have seen a number of 
them—will pay as much as $1,000 per package. 

Mr. Hickox. With the exception of two bills of lading that were 
mentioned this morning, is it not a fact that the ordinary bill of 
lading, the English bill of lading, contains a limitation of not more 
than 20 pounds to the package, and that that has been so for years? 

Mr. Hill. I do not think that is correct. 

Mr. Hickox. Are you familiar with English bills of lading ? 

Mr. Hill. I am not so familiar with English bills of lading as I 
am with American bills of lading, naturally, because I am an 
American exporter. 

Mr. Edmonds. I would like to ask you a question myself right in 
that regard. 

What would be the difference—will you tell the committee what 
would be the difference if they had declared the full value of the 
package when it was shipped as first-class freight? 

Mr. Hickox. I do not know what the particular steamship com¬ 
pany’s rates were, but if they shipped a package that was really 
worth $2,300 and they received a bill of lading which said that the 
freight rate was largely regulated on the value of $100, why then 
I say that the shipper was not dealing squarely with the steamship 
company and that if the true value had been stated, the shipper 
could and should have paid an additional freight rate based on that 
additional value. 

Mr. Edmonds. Now, in your freight rates you have classes A, B, 
C, and D. I have seen them myself published in the papers, and 
your highest rate is class A. Now, if this is class A, you would not 
charge any more if it was worth $1,000 or $2,300, would you? 

Mr. Hickox. Oh, yes; you would. If anybody chose to ship any 
specially valuable kind of merchandise, he would be expected to pay, 
and he does pay in the trade normally, a freight rate commensurate 
with the value of the package. 

Mr. Edmonds. What does he get for it? He gets no guaranty. 

Mr. EIickox. Yes; he does. He gets a value stated in his bill of 
lading, which is the value of the package, and its value is the limit 
of the carrier’s liability. 

Mr. Edmonds. But it is the value that you folks will allow him 
to insure for. You won’t pay any more than your $100 anyhow. 

Mr. Hickox. Certainly we will. The limitation of $100 is then 
out. and the limitation of the carrier’s liability in this particular 
case would have been $2,300. 

Mr. Edmonds. You mean to say that if he had put the value of 
that package in his bill of lading, you would wipe out that clause 
and say you would not limit your liability to $100 ? 

Mr. Hickox. Exactly. That is exactly what I do say. 

Mr. Hill. What rate would they charge us? 

Mr. Hickox. Well, you will have to ask the traffic man of the 
particular line. I can not tell you that. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 191 

Mr. Lehlbach. As I understand it, the traffic people here that 
have testified said they spent two or three weeks trying to ascertain 
Avhat such a rate would be. The agents of the company said they 
could not give them such a rate, and in rare instances when they did 
get such a rate it was absolutely prohibitive. 

Mr. Hickox. I think you will find if you interrogate the steamship 
people that there has never been the slightest difficulty in finding out 
what the additional rate is to be. 

Mr. Hill. That is not the case, sir. There is always a great deal 
of difficulty. 

Mr. Hickox. The steamship people here will be able to speak for 
themselves on that point. 

Mr. Edmonds. All right, we will let the witness go, then. 

Mr. Campbell. I would like to ask the witness to read into the 
record clause 21 of the bill of lading to which he refers, so that we 
may have it. 

Mr. Hill. Clause 21 in this particular bill of lading reads as fol¬ 
lows. 

Unless a higher value be stated herein, the value of the goods does not ex¬ 
ceed $100 per package, nor $8 per cubic foot, and the freight thereon has been 
adjusted on such valuation, and no oral declaration or agreement shall be evi¬ 
dence of a different valuation. In computing any liability of the carrier in 
respect to the goods, no value shall be placed thereon higher than the invoice 
costs, including freight prepaid hereunder, not exceeding $100 per package nor 
$8 per cubic foot, nor such other value as may be stated herein. Nor shall 
the carrier be held liable for any profits or increase of price or value over such 
cost not exceeding the said value, nor any special or consequential damage, and 
the carrier shall always have the option of replacing any lost or damaged goods. 

Mr. Kirkpatrick. Right there—suppose you do value them at 
their real value, you still have every other single restriction of the 
bill of lading to get past before you get a recovery, do you not? 

Mr. Hill. Yes, sir; we do. 

Mr. Kirkpatrick. That is the only one that is obviated by your 
declaration of value? 

Mr. Hill. It has always been the custom, sir, that when mer¬ 
chandise pays the first-class freight rate, that has been supposed to 
cover—to be sufficient for any freight or any other services ren¬ 
dered. 

Mr. Edmonds. That limits the liability also to class B and class C. 

Mr. Hill. I do not know about class B or class C. All of our 
merchandise is first-class freight, and we never question anything 
else. 

Mr. Edmonds. I think class C is also package freight, is it not? 

Mr. Hill. I think it is, under certain conditions. 

Mr. Edmonds. C and D are bulk freight. 

Mr. Hill. I think C and D are bulk freight. But with those I 
have .had little experience, because we are not in that class of 
business. 

Mr. Edmonds. I suppose on a load of coal they limit the liability 
to $100? [Laughter.] 

Mr. Hill. Here is an interesting photograph, sir, showing how 
we sell our merchandise in some of the inaccessible places of South 
America. That is a photograph of our traveler carrying our sam¬ 
ples. [Showing photograph.] 


192 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Edmonds. Is that you going up there ? 

Mr. Hill. No; that is my salesman. 

Mr. Edmonds. We are very much obliged to you for your testi¬ 
mony, Mr. Hill. 

Is Mr. Englar present? We will hear you now, Mr. Englar. 

STATEMENT OF MR. D. ROGER ENGLAR, REPRESENTING THE 
TRADE PROTECTIVE ASSOCIATION. 

Mr. Englar. Mr. Chairman and gentlemen of the committee, I 
appear here as counsel for the Trade Protective Association, which 
has just been formed, and, unfortunately, this meeting came on a 
little early for us because we are not yet incorporated. The purpose 
of this association is to bring about cooperation between shippers 
and underwriters, with a view to reducing losses by theft and pil¬ 
ferage. The membership of the association is made up principally 
of various trade bodies, three of whom are represented here this 
morning by three of the speakers. Their purpose is to combat these 
losses, not only by bringing about legislation but by practical steps 
in the way of packing, bringing about convictions, and all other 
means which will tend to discourage theft and pilferage. 

I shall address myself entirely to the legal aspects of the situa¬ 
tion. I am not going into the merits of it, which have been so 
fully discussed. And in that connection I would like to ask if I 
may have put into the record a resolution and memorandum in sup- 
jiort of that which I have filed with the chairman by letter. I will 
give you a copy, Mr. Campbell. I prefer not to read them, because 
my time is limited, and I will give Mr. Campbell a copy and he can 
answer it as he sees fit. I would rather spend the time that I have in 
discussing the strictly legal aspects. 

Mr. Edmonds. It may be placed in the record at this point. 

The paper referred to follows: 

Memorandum in Support of Resolution Passed by the Trade Protective 

Association on June 29, 1921, Indorsing the Proposed Amendment to 

the Harter Act. 

The first two sections of the act of February 13, 1893, commonly known as 
the Harter Act, provide in substance that the master or owner of any vessel 
transporting merchandise to or from a United States port shall not insert in 
any bill of lading or shipping document any clause, covenant, or agreement 
whereby their obligation 

“ To exercise due diligence, properly equip, man, provision, and outfit said 
vessel, and to make said vessel seaworthy and capable of performing her 
intended voyage, or whereby the obligations of the master, officers, agents, or 
servants to carefully handle and stow her cargo and to care for and properly 
deliver same, shall in any wise be lessened, weakened, or avoided.” 

The third section of the act provides, in substance, that if the owner of such a 
vessel hhs used due diligence to make her seaworthy, properly manned, equipped 
and supplied, neither the vessel nor her owners shall be responsible for dam¬ 
age or loss resulting from faults or errors in navigation or in the management 
of the vessel. 

The intent of the act is perfectly clear: The shipowner is made responsible 
for the seaworthiness of the vessel when she begins the voyage, and for the 
proper handling, custody, and delivery of the cargo; these are things which are 
presumably within the shipowner’s control. On the other hand, the shipowner 
is relieved from liability for the navigation and management of the ship while 
she is at sea and beyond his personal control. 


THEFT, ETC,,’OF EXPORT AND IMPORT SHIPMENTS. 


193 


During the last 25 years, however, the act has been whittled away by the 
courts until it no longer fulfills the purpose for which it was obviously designed. 
This result has been produced principally by the following clauses, which have 
been inserted in bills of lading and sustained by the courts: 

(1) Clauses placing an arbitrary and wholly inadequate value upon the 
goods- shipped, as, for example, $100 per package. (Pierce Co. u. Wells, Fargo 
& Co.; 236 U. S., 278; Reid r. American Express Co., 241 U. S., 544; Leyland & 
Co. (Ltd), i\ Hornblower, 256 Fed. Rep., 289.) 

(2) Clauses requiring claims to be filed and suits to be brought within some 
fixed period. 

A very common clause of this character requires claims to be tiled before the 
goods are removed from the custody of the carrier. The courts have not only 
sustained this clause, but have held that signing for goods as in damaged con¬ 
dition is not a notice of claim within the meaning of this provision. As goods 
are usually received by truckmen or lightermen, who have no knowledge of such 
technicalities, this clause acts as a bar to many thousands of meritorious claims 
each year. (The Persiana, 185 Fed. Rep., 396 ) 

(3) Clauses casting the burden of proof on the consignee. 

Most bills of lading contain provisions which, either directly or indirectly, 
cast on the consignee the burden of proving the negligence of the carrier. As 
the consignee usually does not know and can not find out how his goods were 
damaged, it is seldom possible for him to ascertain or prove that they were 
damaged by the carrier’s negligence. The carrier, who has the custody of the 
goods and who usually is the employer of all the available witnesses, should 
have the burden of proving how the goods were damaged and showing that 
they wore not damaged by his negligence. Clark et al t?. Barnwell et al, 12 
(How.) U. S., 272.) 

(4) Clauses providing that the carrier shall have the benefit of the shipper’s 
insurance. 

Although this clause has been upheld by the courts, the shipper’s under¬ 
writers have been able to nullify it by proper provisions in their policies. The 
result has been, however, to make insurance policies very much more compli¬ 
cated, necessitating loan rece'pts. etc. (Luckenbach et al r. W. .1. McCalmn 
Sugar Refining Co. and the Insular Line, 248 U. S., 139.) 

Through the instrumentality of the clauses above discussed, ocean carriers 
have almost entirely defeated the purpose of the Harter Act. Unfortunately, 
the courts have not construed this act liberally as a remedial statute but have 
been inclined to take a narrow and technical view of its terms. As an original 
proposition, we think it is difficult to maintain that a clause limiting the 
carrier’s liability to $100 for loss of a package worth $5,000 is not one 
“ whereby the obligations of the master, officers, agents, or servants to care¬ 
fully handle and stow her cargo and to care for and properly deliver same 
shall in any wise be lessened, weakened, or avoided.” Nevertheless, the courts 
have so held, and the only way to change this rule is by legislation. 

The enormous increase in losses from theft and pilferage during recent years 
has correspondingly increased the importance of this subject. Under present 
conditions, it is actually cheaper for carriers to pay damages at the agreed 
valuations than to .pay for adequate protect'on of valuable goods. It is the 
belief of those who have made the most thorough investigation of the subject 
that the only way to correct the appalling conditions which exist to-day in 
respect of theft and pilferage is to impose the responsibility for such losses 
on the only interest which is in a position to prevent them—i. e., upon the 
carriers. The fact that such losses are now borne by cargo underwriters 
affords no answer to the difficulty; for cargo underwriters can only pay losses 
out of premiums, and, in the long run, the losses are borne not by the under¬ 
writers but by the shippers and consignees. Furthermore, the risk of theft and 
pilferage has now reached such serious proportions that any further increase 
in the losses may render it impossible to get insurance. 

Respectfully submitted. 


Counsel for the Trade Protective Association. 

Minutes of a special meeting of the Trade Protective Association, held in the 
board room of the National Board of Marine Underwriters, at 44 Beaver Street, 
in the Borough of Manhattan, city, county, and State of New York, on .Tune 29, 
1921, at 2.30 p. m. 

60683—21-13 


t 




194 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

• 

There were present: Merchants Association of New York, L. H. Bonn, H. B. 
Twombly; National Association of Manufacturers, Mr. Stackpole, representing 
Mr. M. Gonzales; Tanners’ Council, Mr. Lee, representing Mr. Mitchell; Wilton 
Manufacturing Co., W. S. Poor; Export Managers’ Club, Mr. Golden; American 
Manufacturers’ Export Association, Mr. Erb, representing Mr. Downes; Ameri¬ 
can Exporters’ and Importers’ Association, P. L. Guiterman, Allerton D. Hitch; 
American Institute of Marine Underwriters, Hendon Chubb, Benj. Bush, H. H. 
Beed ; Harrington, Bigham & Englar, D. B. Englar; A. It. Lee & Co., A. It. Lee. 

Mr. Beed acted as chairman of the meeting and Mr. Driver as secretary. 

The meeting having been called to consider the advisability of amending the 
Harter Act and Cummins Act, the discussion at the meeting was confined to this 
subject. Various amendments were considered and discussed, including Senate 
bill No. 327, introduced by Mr. MacKellar on April 12, 1921. After full discussion 
and deliberation the following amendments were formulated: 

PROPOSED AMENDMENT TO SECTION 1 OF THE HARTER ACT OF FEBRUARY 13, 1893, 
3 7 STATUTES AT LARGE, PAGE 4 4 5, CHAPTER 105. 

Be it enacted by the Senate and House of Representatives of the United States 
of America, in Congress assembled, That section 1 of the act entitled “an act 
relating to navigation of vessels, bills of lading, and to certain obligations, 
duties and rights in connection with the carriage of property,” approved the 13th 
day of February, 1893, which reads as follows, to wit: 

“ That it shall not be lawful for the manager, agent, master, or owner of any 
vessel transporting merchandise or property from or between ports of the United 
•States and foreign ports to insert in any bill of lading or shipping documents any 
clause, covenant, or agreement whereby it, he, or they shall be relieved from lia¬ 
bility for loss or damage arising from negligence, fault, or failure in proper 
loading, stowage, custody, care or proper delivery of any and all lawful mer¬ 
chandise or property committed to its or their charge. Any and all words or 
clauses of such import inserted in bills of lading or shipping receipts shall be 
null and void and of no effect.” 

be and the same is hereby amended to read as follows: 

“ That it shall not be lawful for the manager, agent, master, or owner of any 
vessel transporting merchandise or property from or between ports of the United 
States and foreign ports, to insert in any bill of lading or shipping document, any 
clause, covenant, or agreement whereby it. he, or they shall be relieved from lia¬ 
bility for loss or damage arising from negligence, fault, or failure in proper 
loading, stowage, custody, care, or proper delivery of any and all lawful mer¬ 
chandise or property committed to its or their charge, or shall have the benefit of 
any insurance effected by the shipper or consignee thereof, or whereby his, its, or 
their liability shall be limited to any sum less than the full actual amount of such 
loss or damage, notwithstanding any agreement purporting to fix the value of 
such merchandise or property at a sum less than its actual value, whether in 
consideration of a reduced rate of freight or otherwise . In the event of loss or 
damage, the burden of proving freedom from negligence shall be upon the vessel 
and her owner. 

“ Notice of all claims for loss or damage visible from a superficial examina¬ 
tion of the merchandise or of the barrel, box, bale, package, or other container 
holding the same, shall be given the carrier before removal from the dock; but 
a notation on the receipt given for any goods or merchandise to the effect that 
the same are in damaged condition shall be deemed sufficient notice of claim . 
Notice of all claims for loss or damage discoverable only by opening the barrel, 
box, package, bale, or other container, shall be given the carrier within a rea¬ 
sonable time after the delivery of the merchandise to the receiver thereof, such 
reasonable time being determined by the nature of the merchandise transported, 
and the circumstances of each case. 

“No clause shall be inserted in any bill of lading or shipping document 
whereby the time within which suit must be brought against any vessel or car¬ 
rier, subject to the provisions of this act, shall be limited to a period of less than 
one year. 1 

“Any and all words or clauses inconsistent with this section inserted in bills 
of lading, or shipping receipts, shall be null and void, and of no effect.” 


* Italics indicate new matter. 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 195 


* 


PROPOSED AMENDMENT TO THE CUMMINS ACT OF AUGUST G, 1916. 

Beit, enacted by the Senate and House of Representatives of the United States 
of America in Congress assembled, That so much of an act to amend an act en¬ 
titled “An jict to amend an act entitled ‘An act to regulate commerce (approved 
Feb. 4, 1887), and all acts amendatory thereof, and to enlarge the powers of the 
Interstate Commerce Commission,’ ” approved the 9th day of August, 1916, which 
reads as follows, to wit: 

“ Provided, however, That the provision hereof respecting liability for full 
actual loss, damage, or injury, notwithstanding any limitation of liability or re¬ 
covery or representation or agreement or release as to value, and declaring any 
such lim tation to be unlawful and void, shall not apply, tirst, to baggage carried 
on passenger trains or boats, or trains or boats carrying passengers; second, to 
property except ordinary live stock received for transportation concerning which 
the carrier shall have been or shall hereafter be expressly authorized or required 
by order of the Interstate Commerce Commission to establish and maintain 
rates dependent upon the value declared in writing by the shipper or agreed 
upon in writing as the released value of the property, in which case such declara¬ 
tion or agreement shall have no other effect than to limit liability and recovery 
to an amount not exceeding the value so declared or released, and shall not, so 
far as relates to values, be held to he violation of section 10 of this act to regu¬ 
late commerce, as amended; and any tariff schedule which may be filed with the 
commission pursuant to such order shall conta'n specific reference thereto and 
may establish rates varying with the value so declared or agreed upon; and the 
commission is hereby empowered to make such order in cases where rates de¬ 
pendent upon and varying with declared or agreed values would, in its opinion, 
be just and reasonable under the circumstances and conditions surrounding the 
transportation. The term ‘Ordinary live stock’ shall include all cattle, swine, 
sheep, goats, horses, and mules, except such as are chiefly valuable for breeding, 
racing, show purposes, or other special uses.” 
be and the same is hereby amended to read as follows, to wit: 

“ Provided, however, That the provisions hereof respecting liability for full 
actual loss, damage, or injury, notwithstanding any limitation of liab.lity or re¬ 
covery or representation or agreement or release as to value, and declaring 
any such limitation to be unlawful and void, shall not apply, first, to baggage 
carried on passenger trains or boats, or trains or boats carrying passengers; 
second, to property, except ordinary live stock, received for transportation con¬ 
cerning which the carrier shall have been or shall hereafter be expressly au¬ 
thorized or required by order of the Interstate Commerce Commission to estab¬ 
lish and maintain rates dependent upon the value declared in writing by the 
stepper or agreed upon in writing as the released value of the property, in which 
case such declaration or agreement shall have no other effect 'than to limit the 
liab.lity and recovery to an amount not exceeding the value so declared or re¬ 
leased, and shall not, so far as relates to values, be held to be a violation of sec¬ 
tion 10 of this act to regulate commerce, as amended; and any tariff schedule 
which may be filed with the commission pursuant to such order shall contain 
specific reference thereto and may establish rates varying with the value so de¬ 
clared or agreed upon; and the commission is hereby empowered to make such 
order in cases where rates dependent upon and varying with declared or agreed 
values would, in its opinion, be just and reasonable under the circumstances 
and conditions surrounding the transportation: Provided further, That where 
loss, damage, or injury occurs to property delivered to any common carrier, rail¬ 
road, or transportation company, the burden of proving freedom from negligence 
shall be upon such common carrier , railroad, or transportation company, and 
where such loss, damage, or injury results from the negligence of the common 
carrier, railroad, or transportation company it shall be liable for the full actual 
loss , damage, or injury, and shall not have the right, to limit the amount of re¬ 
covery against it to any declared or released value of such property. 1 

“ The term, ‘ ordinary live stock ’ shall include all cattle, swine, sheep, goats, 
horses and mules, except such as are chiefly valuable for breeding, racing, 
show purposes, or other special uses.” 

Upon motion of Mr. Twombly, duly seconded by Mr. Flitch, the following 
resolutions were adopted: 

Resolved . That the proposed amendments to the Harter Act and Cummins 
Act here formulated, and set forth at large in the minutes of this meeting, will 


1 Italics indicate new matter. 





196 THEFT/ ETC., OF EXPORT AND IMPORT SHIPMENTS. 


tend materially to check the unprecedented and still increasing volume of 
losses by theft in transit, which now constitute such a serious burden upon 
the commerce of this country. And be it 

Further resolved, That the said amendments will constitute an important 
step in the direction of those reforms in transportation for the promotion of 
which this association was organized; and that similar beneficial results can 
not be obtained under any system which depends for its efficiency upon a sup¬ 
posed option to the shipper as between a released bill of lading and one which 
subjects the carrier to full liability. And it is, therefore, 

Further resolved, That't his association hereby adopts and approves the said 
amendments and that the various trade bodies affiliated with ibis association 
be requested, through their members here present, actively to support these 
amendments, not only by resolutions, but by personal and active support before 
such congressional committees as may have occasion to consider legislation 
affecting the liability of carriers. And to this end, it is 

Further resolved, That the chairman be, and he hereby is, authorized and 
directed to send to each of such affiliated bodies, a copy of this resolution, to¬ 
gether with a letter to be formulated by the chairman, explaining in greater 
detail the purpose of this resolution and the reasons for supporting the said 
amendments. 

Mr. Englar. There are several general observations that I want to 
make. One is as to the scope of the investigation of this committee. 
Of course, there is no limit to the scope of such an investigation, and 
some of the reforms suggested here would be very far-reaching. I 
do not wish to be understood as expressing disapproval of any of 
those plans, because they are constructive, and if they are feasible 
I should be heartily in favor of them, but I do want to point out 
particularly the very little change that need be made in the law to 
bring about the particular reforms to which most of the addresses 
have been directed. What I fear is that under the guidance that 
the committee may have to-morrow the investigation may be led olf 
in pursuit of some utopia, and we may overlook the particular thing, 
the one small step perhaps, that we might take, without breaking 
much new ground. 

Mr. Edmonds. If it is a cool utopia, the committee will be led 
there very readily. [Laughter.] 

Mr. Englar. Most of the addresses here have been directed to <) 
proposed amendment to the Harter Act. The resolution which I 
have filed with the committee embodies a proposed amendment of 
the Harter Act. The changes in the law that are set forth in that 
amendment are directed at the four abuses which have grown up 
under the Harter Act, and they have all been referred to here. I 
simply want to bring them together and direct the attention of 
the committee to the present state of the law. I think there is a 
case where the committee should have before it exactly what the law 
is to-day, because, otherwise, I think they are likely to get a false 
idea as to the magnitude of their task. In other words, I think it is 
not nearly so difficult for them to bring about the particular reforms 
that they favor as it might appear from some of the discussions here. 

For example, in these bills of lading that have been read into 
the record there are many very burdensome clauses, but the fact is 
that those clauses are, to a very large extent, void under the pres¬ 
ent law. I may not have an opportunity to go into this fully, but 
Mr. Laws, of Philadelphia, is here, who is thoroughly familiar 
with the present law, and I trust that he will have a chance to go 
into it more at length. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


197 


I want to say, briefly, that the Harter Act, the act of 1893, was, 
i,h my opinion and in the opinion of a great many people who con¬ 
sidered it, intended to accomplish just what we ask the committee 
now to bring about. Its effect has been very largely nullified by 
court decisions. Where you have an exception in the bill of lad¬ 
ing, for example, against loss by leakage, that exception is invalid 
in so far as it applies to leakage due to the negligence of the car¬ 
rier. In other words, if you demonstrate that the barrels were not 
properly stowed, the exception is void as to any damage that re¬ 
sults from that cause. That is covered by count also. The precise 
effect of that exception is one, I think, that you should have in 
mind, because that does have an effect, because it does not protect 
the carrier from leakage due to negligence. It has this effect, that 
if when merchandise gets to its destination and there is a loss by 
leakage, the fact that there is an exception of leakage in the bill 
of lading casts on the consignee the burden of proof of negligence. 

In other words, the courts state that the carrier is liable for his 
own negligence or the negligence of his servants, even with this ex¬ 
ception in the bill of lading, but that exception has the effect of 
casting on you the burden of proving Ids negligence. In other words, 
if there were in the bill of lading no exception of leakage, all you 
would have to do would be to prove that the goods were delivered 
to the carrier in good condition and that when they arrived at des¬ 
tination there was a damage due to leakage. That would be enough. 
Then the carrier would have the burden of excusing himself. But 
by having that exception in there, the carrier is in a position to say, 
“Well, do you think I am negligent? Go ahead and prove it.” Of 
course you can not prove it. You get there and you find your goods 
on the dock; the ship by that time is perhaps a thousand miles away 
and you have none of the evidence. The evidence is all in the hands 
of the carrier, and the result is you can not prove the negligence. 
Now, that is one of the points that has been mentioned here a 
number of times, but I shall take up in the order in which I have 
them in my memorandum the particular clauses which have very 
largely nullified the Harter Act. 

The" Harter Act contains three important sections. 

The first two sections provide in substance—and I am quoting 
here from the act—“that no owner or master of any vessel shall 
insert in any bill of lading or shipping document any clause, cove- 
mint, or agreement whereby their obligation”—and here is where 
I quote from the act—“ whereby their obligation to exercise due dili¬ 
gence to properly equip, man, provision, and outfit said vessel, and 
to make said vessel seaworthy and capable of performing her in¬ 
tended voyage, or whereby the obligations of the master, officer, 
agents, or servants to carefully handle and stow her cargo and to 
care for and properly deliver" same, shall in anywise be lessened, 
weakened, or avoided.” 

Now, the courts have said that when the carrier says he is only 
liable for $100 for the loss of a $5,000 package, that does not lessen 
or weaken or avoid his obligation. I think that is a very arguable 
question. I do not think the gentlemen who passed that act ever con¬ 
templated such construction, but that is the construction the courts 
have put upon it, and it is a very technical branch of the law. For 
example, some years ago there was a case in the Supreme Court, the 


198 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

case of Calderon against the Atlas Steamship Co., where inadver¬ 
tently the carrier said that he would not be responsible for a package 
that was worth more than $100. The Supreme Court said, “ That is 
void, because you have said you will not be liable at all if the pack¬ 
age is worth more than $100. You can say you will not be liable 
for more than $100, but you can not say that you will not be liable 
at all for a package which is worth more than $100.” So that was 
ruled off. That shows you just how technical it is. 

On the other hand, although they are very strict in matters of 
that kind, they are extremely liberal in other aspects. Take, for 
example, one of the leading cases on this subject is the Pierce Co. 
against Wells Fargo & Co., in 236 U. S. There a carrier limited 
his liability—an express company—to $50 in respect of a carload 
of Pierce Arrow cars, and it was contended that that was clearly 
unreasonable; that that was not a real valuation; that it was purely 
a subterfuge; but the Supreme Court said no, as long as it was in 
the form of a valuation it w T as good, and as soon as it took a dif¬ 
ferent form it was bad. And in the case of Leland & Co. against 
Hornblower the point was squarely argued—that was 256 Federal— 
that these clauses did lessen, weaken, or avoid. 

Mr. Kirkpatrick (interposing). May I interrupt you there? They 
did not say that the carrier could put the value on, they said that the 
shipper could. 

Mr. Englar. It was presented as the value. 

Mr. Kirkpatrick. But the theory of the decision was that the 
shipper put this value on. 

Mr. Englar. The theory was that the shipper also did. 

Mr. Kirkpatrick. You said the carrier put the value on. 

Mr. Englar. I did not mean to say that. I do not mean to mislead 
the committee at all. The theory on which this is all supported is that 
the shipper does it . Of course, on no other theory would it be ten¬ 
able, and I have no doubt that is the contention of the owners; I have 
no doubt that is what they will say to-morrow—that the shipper does 
it. They give him a bill of lading with $100 in it, and he values it at 
$100, and why should he not? Now, I would like to say a word on 
that point, because that brings up the question of an alternative bill 
of lading. 

It was suggested j^esterday by one of the gentlemen who spoke that 
it would be wise to have two different kinds of bills of lading, and 
I have no doubt that that will be the argument to-morrow. On that 
I want to say this: That it is well-settled law in this country that 
the carrier and the shipper do not stand on an equal footing. The 
shipper has not freedom of contract. Now, we are talking to-day 
about the shipper’s freedom of contract. It has been the law of this 
country for 100 years that the shipper has not freedom of contract. 
If lie had, there would be no excuse for us to be here at all; and I say 
that there is absolutely no difference in this respect between giving 
the carrier liberty not to assume any liability at all and giving him 
liberty not to assume more than $100 liability. Tf you are going 
to reserve freedom of contract, why is it that the carrier can not 
say, “ Here are two bills of lading. Under one I assume no liability; 
under the other 1 assume full liability”? He can not do that. That 
is well-settled law. It is simply because the courts have recognized, 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


199 


long before there was any Harter Act, that there is not real freedom 
of contract and that the shipper is to be protected. 

Now, what is the use of saying to a carrier, “ You can not exempt 
yourself from liability, but you can limit it to $100”? 

And $100 is not the worst. I had a bill of lading before me the 
other day—a French bill of lading—where the limitation was 10 
francs per package, which at the present rate of exchange would 
be about 80 cents. Then, to make assurance doubly sure, they said, 
“ But in no event to exceed the amount of freight paid.” 

Once you open the door for that sort of thing it is certain to be 
carried to ridiculous extremes. And I will say, although I hold no 
brief for English shipowners, the English shipowners have shown 
a little broader vision in this thing, and they have not abused their 
privileges, I think, as much as have the American lines. They have 
been a little more reasonable, and they seem to think that it pays 
to be so. 

So much for that valuation clause. I say, if you are going to 
permit the carrier to limit his liability to a purely fictitious figure, 
you may as well say that lie can have the option of exempting him¬ 
self from any liability at all; because if ypu do not, it is just like the 
case of the young lady who was told she could go in swimming, but 
she could not go near the water. That is just what it comes down to. 

Now, the second is the clause requiring claims to be filed and suits 
brought within a certain specified time. On the same day that I 
received notice of these hearings I happened to receive in the morn¬ 
ing's mail 12 letters from a P. & I. Club insuring American steam¬ 
ship owners—and they are all form letters. They relate to 12 dif¬ 
ferent claims, and the substance of them ail I will quote for the 
record: 

“ It is apparent from information obtained that clause 22 of the 
carrier’s bill of lading limiting the time for presentation of claim 
has not been complied with in this instance, and for this reason we 
regret most respectfully that we are obliged to decline any and all 
liability for the steamship company ”—naming the company. 

There were 12 of those—12 claims simply thrown out because the 
claim had not been presented within the terms of that clause. That 
is another clause which really nullifies the intent of the Harter Act, 
and the courts again have shown a disposition to encourage that, 
because in the case of the Persians (185 Fed. Pep.), where the ques¬ 
tion first came up, there were some goods delivered damaged. The 
man who took delivery of them, naturally, was not a lawyer; he was 
not even a merchant; he was a lighterman, as I recall—either that or 
a truckman—and he signed for them damaged. Later suit was 
brought against the carrier, and they said, “ Why, claim was not filed 
before the removal of the goods,” and the consignee said, “ Yes; it 
was. The lighterman receipted for them damaged. He gave me notice 
that they were damaged.” The court said, “ That is true, but he did 
not give the carrier notice of the claim; he only gave notice of 
damage.” So it is wholly impractical under such rulings to pre¬ 
serve your rights, unless you have a lawyer at each pier. That might 
be worse than the present condition. [Laughter.] 

Now, as to the third clause, I covered that at the outset. That is 
as to burden of proof. We feel very strongly that the burden of 



200 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


proof should remain on the carrier, because to cast the burden of 
proof on the consignee is in many cases—in fact, in the majority of 
cases—to take away any right of recovery. I say that Congress, 
having laid down in the Harter Act the general principles on which 
a carrier’s liability should be determined, having said, on the one 
hand, “ You can protect yourself in respect of errors in navigation 
and management,” and, on the other hand, “ You can not exempt 
yourself from certain other things,” either that should be repealed 
or you should put some life into it, so that it shall have some effect, 
and to allow the carrier by subterfuge to sweep all that away is just 
to bring the law into contempt. 

The last clause that I mentioned in my memorandum is the clause 
contained in most bills of lading, providing that the carrier shall 
have the benefit of the shipper’s insurance. That has been the sub¬ 
ject of a long legal fight, and the last few rounds have been won by 
the underwriters. They have been able, by provisions in their 
policies, to nullify that clause in the bill of lading. The whole sub¬ 
ject, was finally passed on by the Supreme Court not very long ago 
(248 U. S.) in the case of Luckenbach against McGahan Sugar 
Refining Co., where the Supreme Court upheld a system of loan 
receipts whereby the underwriters had been enabled to get away from 
that clause in the bills of lading. The difficulty with that, although 
at the moment the underwriters have maintained their position, is 
that it makes a very cumbersome situation. It involves inserting a 
number of clauses in marine insurance policies—in fact, in some of 
them, some long policies, about a quarter of a policy is taken up 
with provisions relating to this way of getting away from the benefit 
of the insurance clause, and it involves payments on loan receipts 
and various other cumbersome procedures which should be un¬ 
necessary. 

We feel that unless those four abuses can be corrected the Harter 
Act is of very little use to American shippers. 

I would like to take up briefly now some of the questions that 
came up during the discussion, as far as I have heard them. It has 
been said that this would be a burden on American shipping; that 
it would be just as much a burden on foreign shipping as on Ameri¬ 
can shipping. The Harter Act is a burden on all shipping that 
enters or leaves the ports of the United States, because it operates 
on all of them. They have all acquiesced in it. Most of them have 
in their bill of lading “subject to the act of 1893,” and it does not 
bear a bit more harshly on American shipping than on foreign 
shipping, and neither would the proposed amendment. 

The clause “ not liable for anything that can be insured against ” 
has been held void by the courts. I state that in answer to some 
question that arose here during the hearing. 

Another objection that has been made—of course I shall not be 
here when the carriers are heard, and I am simply answering such 
objections as I have gathered from the cross-exammation thus far— 
it has been said that a lot of this loss does not happen when the goods 
are in the custody of the steamship company. If that is so, so 
much the better for the steamship companies, because they will only 
have to pay for what happens while they have the goods. Even 
after these amendments are made, if they are made, the shipper or 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 201 


consignee will still have to prove that the loss happened when the 
steamship company had the goods. He will then have to submit to 
cross-examination by Mr. Campbell and others, and he will have to 
state whether he has personal knowledge of what was in the case, 
and he will have to prove by eyewitnesses eyery essential fact in 
order to recover, and if it proves then that the great bulk of these 
losses do not happen in the custody of the ocean carrier we will at 
least know where we stand. We can then devote our attention to 
the truckmen, the lightermen, or whoever does pilfer these goods 
and steal them. There are two classes of cases certainly where the 
proof would be easy and where the steamship companies certainly 
can not object. 

That is where they receipt for 10 cases and they only deliver 8. 
The burden of proof is not very difficult there. Another case is 
where • they receipt for goods in good condition and they come 
broken—the cases when they deliver them are broken and have the 
contents gone—where they get a damage receipt. Those two cases 
would be very easy to prove, and if you can not prove your case you 
can not recover. So it seems to me that there is no substance in that 
objection. 

Some questions were asked here about uniform bills of lading. 
There is no uniform ocean bill of lading. There is a conference going 
on now in London with the idea of bringing about such a uniform 
bill of lading, and a number of people have gone from this country 
to attend it. But, of course, if such a bill of lading can be brought 
about, it will be just by voluntary means, agreement, and I have very 
little confidence in our ability to reach any such agreement. Fur¬ 
thermore, any bill of lading that can be reached by agreement will 
not be favorable to shippers. I think the shippers may get some con¬ 
cessions, but they will not get anything like what they require, and it 
is impossible to conceive of any real reform without legislation. 

When the Harter Act was passed, everybody thought that it was a 
very innocuous act from the standpoint of the steamship companies. 
It gave them a great deal more than it took away from them. In 
fact, I never could see that it took anything away from them; never¬ 
theless, it was said then that it was going to ruin everybody, but 
since then the Canadian Government has passed an act almost word 
for word identically with it. Similar acts have been passed in Aus¬ 
tralia and elsewhere, and I want to read one passage from this report 
which has been referred to, of the imperial shipping commission. It 
has been referred to a number of times, and I want to read one pas¬ 
sage from page 10. [Reading:] 

The view has been expressed to us that in effect shipowners could evade 
their liability under any of the existing legislations, except perhaps the Cana¬ 
dian act by agreeing to extremely low values for goods with the shipper. 

The word “ agreeing ” is quoted. 

It appears to us that it will be necessary in the new legislation: 

1. To provide for the settlement of a reasonable maximum value as the limit 
of liability, or probably several such limits for the various trades, and to pro¬ 
vide in some way for changes to be made to accord with any altered condition 
in freights and values. 

2. To prevent evasion of Ihe general liability by any system of low or nomi¬ 
nal agreed values. 


202 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


I read that simply to show that this conception that these arbitrary 
clauses are an evasion of the present law is not an invention of our 
own; it is recognized all over the world, and indeed I had the privilege 
of trying to explain to a number of very indignant French importers, 
the consignees, how. it was that the $100 limitation clause was con¬ 
sistent with the language of the Harter Act which I have just read. 
The French thought that the Harter Act imposed full liability on 
the carrier, and they could not understand it. All I could tell them 
was that the court said so, and that settled it. I have been told, al¬ 
though I have not looked it up—I did not have time to; I had such 
short notice of this meeting—that the French courts have actually 
decided, in construing the Harter Act, that those valuation clauses 
were contrary to the Harter Act, notwithstanding our decisions on 
the subject. I have not had an opportunity to confirm that. I can 
only say that I have been so informed, and I have been credibly in¬ 
formed and believe such is the fact. I may be able to get them. 

There are a number of countries which have passed laws similar 
to the Harter Act. That is one of the questions that was asked 
yesterday. Canada and Australia are among them; also New 
Zealand. 

Mr. Edmonds. Is there a law similar in England? 

Mr. Englar. There is no English law similar. 

Mr. Edmonds. The English have a liability act, though? 

Mr. Endear. Nothing similar to our Harter Act. Most of the 
provisions that are invalid under the Harter Act are valid under 
English law—not under Canadian or some of the other dominions, 
but under English law. But in England the decisions show that 
the courts, in view of the great freedom of contract enjoyed there, 
have construed those clauses very strictly. In other words, instead 
of evidencing sympathy for the carrier, they have shown a great 
deal of sympathy for the shipper, and wherever they could they 
have held that the clause did not apply. There are some decisions 
there that go very far, such as deviation clauses. No matter how 
wide the deviation clause, they hold that it has got to be reason¬ 
able. They say that no matte)* what it says practically, it only means 
a deviation within a reasonable degree. If you go outside of that, 
they will not construe the clause intending to cover the case. That is 
just an illustration. 

Now, as to this question of the option that the shipper has—Mr. 
Campbell asked to have that clause read into the record, no doubt 
to bring out that it starts off by saying “ Unless a higher value is 
declared.” I can not speak from personal knowledge. I am not a 
shipper, and therefore 1 can not say from personal knowledge; but 
1 have a good deal of knowledge on that point from clients, and 1 
firmly believe, and I state on information, that ocean carriers do 
not have any rates for higher values, and that in many cases the 
declaration of a higher value would not involve any higher rates. 
In other words, their freight as it stands is high enough kTcover this 
risk. I was in one case myself which went up to the Supreme Court 
where we brought out the fact that the rate would have been just 
the same—that Avas the shipment of an automobile—and we brought 
out that the rate would have been just the same if the higher value 
had been declared; but the Supreme Court says that diefnot make 
any difference; that the valuation was there, and that settled it. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 203 

Where the carriers have been pressed for rates, it has been testi¬ 
fied here, and I believe it to be a fact, that they purposely give 
prohibitive rates, because they wish to discourage having this extra 
liability placed upon them. For that, among other reasons—I want 
to close with one point which I think goes to the root of this whole 
thing—so long as there is an option for the shipyier to take the 
higher valuation or not to take it, the carriers will make it pro^~ 
hibitive; they will do everything to discourage him from taking it, 
and it will be a thoroughly impractical system. Once you say that 
he must take it, competition will take care of the rest. When you 
tell him that he can not exempt himself from this liability, then the 
question of what he is to charge for it will be taken care of just like 
any other item of cost. 

What seems to me to be the most dangerous feature of this whole 
situation is this: I fear that the mechanics of the act—the methods of 
working it out—will be so confused with the principle involved that 
the committee may feel discouraged at the difficulties presented. The 
carriers will undoubtedly cite cases of great hardship to them if 
they assume these high liabilities. They will point out that they 
are entitled to additional compensation. 1 do not think anybody 
disputes that they are entitled to additional compensation. If they 
are going to carry these added losses themselves instead of throwing 
them onto somebody else they are entitled to such compensation as 
will enable them to absorb that loss. But I say that is an entirely 
distinct matter. I say that the thing to be settled here is the prin¬ 
ciple whether or not they should carry these losses. 

If they should, there is no difficulty; nobody here is going to put 
the carriers out of business. They are all very friendly with them, 
and we want them to do business and have business, and nobody 
wants to do anything that is unreasonable. I am sure none of these 
men here expect the carriers to lose money, and once it is deter¬ 
mined as a matter of public policy that the carriers should and must 
carry this risk of theft and pilferage while goods are in their cus¬ 
tody everybody will cooperate in working out a system of determin¬ 
ing their extra compensation. That is just a matter of working 
out details. Now, just how that should be done I could suggest my¬ 
self half a dozen ways, but I am not going to do it. There is no use 
going into that until it is settled that they are going to carry the 
losses, but if they are you can protect them. They are entitled to 
certain protection; they are entitled not to have diamonds and so on 
shipped as ordinary merchandise. I might point out that they 
are protected against that now by another section of the Revised 
Statutes which takes care of precious stones, metals, and so on, 
but those are details. One thing, for example, I think it would be 
fair enough to provide that the carrier should not be liable for more 
than the average value of goods of the description put into the bill 
of lading. If a man ships woolen goods and it turns out he shipped 
some rare tapestry, the carrier may be entitled to protection. I am 
just throwing out* those suggestions. I have not given much thought 
to that aspect of it, because it seems to me it is a point that comes 
up after you have settled the plain principle involved. The way it 
is handled on the .railroads is they have schedules of different com¬ 
modities and different rates, and there is no reason why the ship¬ 
owner should not have schedules. We do not expect them to carry 


204 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


dress goods or manufactured clothing for the same price that they 
carry bulk cargoes. I say that is a thing that the committee can 
take up as a secondary question, because it does not come up until 
the question of where the loss is to fall has been determined. 

Mr. Lehlbach. Mr. Englar, in discussing certain clauses to be 
found in bills of lading you said some were void under the Harter 
Act and others were construed to be valid but were in derogation 
of the intent of the Harter Act. 

Mr. Englar. Yes, sir. 

Mr. Lehlbach. Have you given any thought to this clause which 
is found in some bills of lading: “ The carrier, at its option, shall 
have all rights and benefits granted to shipowners, permitting a 
limitation of their liability by the laws or customs of any other 
State or country in the port of which said vessel may enter ” ? 

Mr. Englar. That is invalid. That has been settled many years 
ago—that any attempt to provide that a contract of transportation 
made in this country or for shipment to or from this country should 
be governed by foreign law 7 is invalid. 

Mr. Lehlbach. I do not know whether you know 7 or not, but if 
you do can you give us the reason why shipowners, after a clause 
has been expressly declared invalid by the courts, they continue to 
insert it in their bills of lading? 

Mr. Englar. For the reason that I have explained, sir, that it 
casts the burden of proof in many instances on the consignee. 

Mr. Lehlbach. Might he in this particular instance—this can 
not cast any burden of proof. 

Mr. Englar. I think Mr. Price explained that. Those are in 
terrorem. In lots of cases they can scare a man off by that. He 
doesn’t consult counsel, and he just figures that he has no case. 

Mr. Kirkpatrick. Do you know> w T hether the clause requiring 
notice of damage before receipt of the goods has been held valid? 

Mr. Englar. Yes; I referred to the case of the Persiana , where 
it w 7 as held that not only was the clause valid, but that signing for 
goods as damaged was not sufficient notice of claim. 

Mr. Kirkpatrick. Have you any opinion as to what would be a 
reasonable provision in that respect? There certainly must be some 
notice. 

Mr. Englar. I have embodied one, sir, in the draft of the law 
which I submitted. 

Mr. Kirkpatrick. Very w T ell: that is all right, then, as long as it is 
before us. 

Mr. Englar. 1 have covered all four of those points in that law, 
and have underlined the new part so that it is readily discernible. 

Mr. Hickox. May I ask Mr. Englar a question? 

Mr. Edmonds. Yes, sir. 

Mr. Hickox. Mr. Englar, you have suggested that in England 
they have not any Harter Act, and perhaps I got a wrong impression 
from what you said, but I rather gathered that your idea was that the 
law r in England w T as less favorable to the shipowner than it is in this 
country. 

Mr. Englar. No; you quite misunderstood me. I hesitate to ex¬ 
press any opinion as to English law in your presence, sir. 

Mr. Hickox. You have your own associate resident in England, so 
you need not have any hesitancy. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 205 

Mr. Exglar. I did not mean to convey that impression, Mr. Hickox. 
1 think the law, generally speaking, is more favorable to the carrier 
in England, but X said that the English carriers had not shown the 
same disposition, so far as I had observed, to abuse their immunities 
that they had shown here, so far as they have them here. 

Mr. Hickox. Well, in England a carrier can contract against the 
consequences of his own negligence. 

Mr. Exglar. That is true. 

Mr. Hickox. And here he can not do that. 

Mr. Exglar. That is very true. He can only contract that he will 
only pay $100 or $50. 

Mr. Hickox. And when you speak of the carriers not taking ad¬ 
vantage of their—or perhaps you put the expression another way; 
carriers not taking advantage—will you repeat that expression? 

Mr. Exglar. What I said was that the carriers have not shown 
the same disposition over there to abuse the privileges conferred on 
them bv law. 

Mr. Hickox. Well, now, when you speak of a carrier abusing his 
privileges, are you suggesting that he is doing something more than 
the law says he can do ? * 

Mr. Exglar. No. Unfortunately the law permits him to do it, as 
it now stands. 

Mr. Hickox. Well, there must be some authority, must there not, 
in the end to determine what is a proper thing to do? 

Mr. Exglar. That is true. 

Mr. Hickox. And under our system that is the court, is it not? 

Mr. Exglar. No; I beg pardon, I think the final authority is right 
here. The courts can do it temporarily, but not finally. 

Mr. Hickox. Exactly, but when the people right here, if you please, 
or Congress, as in the Harter Act, pass an act, under our system the 
only conceivable way of knowing what that act means is to leave it 
to the courts, is it not? 

Mr. Exglar. That is true. 

Mr. Hickox. And that has been done in this case. 

Mr. Exglar. That has been done in this case. 

Mr. Hickox. And may I take it that you really disagree with the 
Supreme Court? • 

Mr. Exglar. No. I am glad you reminded me of that, because 
I wanted to state on the record that my remarks are not intended in 
any sense as a criticism of the courts that have rendered these de¬ 
cisions. They are simply following ancient doctrines and principles, 
which in the past have not become as important as they have re¬ 
cently. 

Mr. Hickox. Well, the, question of upholding the limitation of 
value, which I understand is the subject of your special criticism, 
is not a matter which comes from the Harter Act at all, is it? 

Mr. Exglar. No; it does not. 

Mr. Hickox. The Supreme Court, years before the Harter Act 
was passed, dealt with the question of limitation of liability in a 
bill of lading, and held that it was a perfectly proper procedure. 

Mr. Exglar. That is true, but I want to say on that point that 
in my opinion the gentlemen who passed the Harter Act did not 
realize that they were allowing that to continue. I think they used 
unfortunate language. 



206 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Hickox. That is perhaps a matter of controversy, but, at least, 
we know this, that when the Harter Act was adopted, which I think 
you said was also adopted in the same words in Canada—did not 
the Canadian water carriage of goods act specifically provide that 
there could be a limitation of $100 a package? 

Mr. Englar. That is true, Mr. Hickox, but you will bear me out 
that the Canadian act was passed years after our act, and after 
our act had been construed by the courts and they intended simply 
to follow the Harter Act. 

Mr. Hickox. Yes; and after these things which you complain, 
about were perfectly well recognized. 

Mr. Englar. That is true. But I refer you now to the report 
of the Imperial Shipping Commission, where they point out that 
this is an evasion of the intent of the law. 

Mr. Hickox. I do not think they do point it out, and I think that 
it would be very interesting for the committee to read the report of 
that commission, because that report and what you have quoted 
is wholly different from any suggestion made by any representative 
of the shippers or insurance people at this hearing. 

Mr. Englar. I beg pardon. One of the gentlemen to-day sug¬ 
gested something very much like that. 

Mr. Hickox. I do not mean to argue with you on the question of 
what they may or may not have said, but the last witness to-day 
said that he thought the values should be very largely increased, 
without any increase in freight rate until you got up to, say, $1,000 
a package; and one of the witnesses yesterday said that whether or 
not the shippers would be willing to pay an additional freight rate 
if they got some additional liability he could not say until he knew 
wffiat the freight was. Now, this Canadian—or rather this imperial 
conference—has recommended that whatever is fair under all the 
circumstances of the trade should be adopted. Is that not so? 

Mr. Englar. You are speaking of this commission here? 

Mr. Hickox. Yes. 

Mr. Englar. Yes; I think that is substantially so. 

Mr. Hickox. I think we all agree with that, 

Mr. Englar. As I understood the witness’s suggestion, it was that 
the normal freight rate should be sufficient to include liability up 
to $1,000. 

Mr. Hickox. Well, what these witnesses have all said is that the 
present freight rate should be sufficient. 

Mr. Englar. I did not so understand them. I just want to say— 
you have provided me with a detail, but I want to mention that in 
comparing English bills of lading and American bills of lading, this 
benefit of insurance clause which gave so much trouble for years 
was an American invention, and even to-day very few English bills 
of lading, I think, contain it—at least, a great many do not. The 
English did not take it up originally, and they liave'been very slow 
to follow it, even after the Americans introduced it. 

Mr. Loines. May I just ask Mr. Englar one question? You have 
said that this protective association that you are just in process of 
forming—not quite formed yet—is for the purpose of cooperation 
between shippers and underwriters. May I ask if the object of this, 
association is to stop pilferage, or pass the buck to the carrier ? 

Mr. Englar. It is to stop it. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 207 

Mr. Loines. Why, then, have you not suggested the cooperation 
of the shipowners? 

Mr. Englaij. Because until the shipowners have some interest in 
the matter I do not think there is much hope of getting their coopera¬ 
tion. 

Mr. Loines. It ou think, then, that they have no interest in the 
matter now? 

Mr. Englar. Their interest is limited to $100 a package. I mean 
I think they are just as well off under the present situation as they 
would be under any other. I do not wish to make any disparaging 
remarks about the shipowners. I know they are interested, but I 
mean they are not financially interested to any great extent. 

Mr. Edmonds. We will now hear Mr. Nathan B. Williams. 

STATEMENT OF ME. NATHAN B. WILLIAMS, REPRESENTING THE 
NATIONAL ASSOCIATION OF MANUFACTURERS. 

Mr. Williams. Mr. Chairman, I shall only have a brief contribu¬ 
tion to make on this subject, for the reason that I am not anything 
like as conversant with its details in a legal or commercial aspect as 
many of those who have presented the subject to you. 

I represent, as associated counsel, the National Association of Man¬ 
ufacturers. This association is comprised of about 5,600 American 
manufacturers, all of whom are either exporters of goods or poten¬ 
tial exporters of goods. They represent the introduction of the entire 
alphabet of fabricated products as produced in this country, from 
abrasives to zinc. Their interest is widespread, and I think possibly 
the only contribution 1 can make to the discussion of this subject 
is this: Under present existing conditions not only has every Ameri¬ 
can manufacturer engaged in the shipping business an interest as a 
ship operator, but every taxpayer is likewise engaged as a ship oper¬ 
ator. We have Shipping Board vessels in great number, which for 
a long number of years will be operated, and such deficits as accrue 
will come from the Public Treasury until such time as they are dis¬ 
posed of to private interests. So this question of pilferage and 
thievery as respects American goods, both import and export, is one 
that affects every taxpayer, and it seems is one that is distinctly im¬ 
portant to be considered and determined at this time, in order that a 
proper public policy may be developed. 

American manufacturers in 1918 paid 67 per cent of all the income 
and profits taxes collected by the United States Government, so they 
have a 67 per cent interest, primary interest, in the development of 
the American merchant marine, and they expect to pay, and will pay 
at least originally, that proportion of whatever deficits or thieveries 
or other losses occur, and that makes the present one of peculiar 
opportunity for a thorough consideration of this subject, and when 
you take the particular interest of the shipper, the particular interest 
of the insurer, or the particular interest of the carrier is in effect one, 
and unquestionably the fundamental is as to where the particular and 
peculiar responsibility growing out of the handling of American 
cargo freight shall lodge, in order that there may be definiteness and 
certainness with respect to that responsibility and a thorough appre¬ 
ciation of the necessity of adopting all means necessary to protect 



208 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


that carriage and at the same time develop and promote American 
commerce and American industry. 

“ In days of old, when knights were bold,” the American Navy was 
impressed to search the highways of international commerce and 
free them from pirates. Whether those pirates now exist on the 
wharves of this country, whether they exist on the wharves of other 
countries, whether they operate on open steamship lines, or whether 
they are controlled by private operators, it is a matter in which the 
public has a direct or proprietary interest. Unquestionably the full 
resources of the Nation must be turned to a cleaning up of that 
situation, and protection given to American commerce in order that 
that sort of thing may be defeated. 

I think that is all I have to offer, Mr. Chairman. 

Mr. Lehlbach. Mr. Gonzalez, we will hear you now. 

STATEMENT OF MR. MANUEL GONZALEZ, CHIEF LATIN AMERICAN 

TRADE DIVISION, NATIONAL ASSOCIATION OF MANUFACTUR¬ 
ERS, NEW YORK, N. Y. 

Mr. Gonzalez. Mr. Chairman and gentlemen, you have already 
heard a great deal about this program, and consequently I do not 
have to enter into so many details in order to carry into your minds 
the immediate, absolute necessity of correcting the actual conditions 
in regard to pilferage. You know that that question is not only felt 
in the United States, but all over the world. 

Before the war very few shippers had any idea of asking under¬ 
writers to assume the responsibility of any loss from pilferage. As 
a matter of fact, taking the figures of those times, the amount of 
money involved in that loss was negligible. But a wave of immorality 
has flooded the whole world during those years of universal upheaval; 
the losses have been increasing steadily until they are already in¬ 
sufferable. From zero in 1913 or 1914, they had reached the enormous 
amount of $10,000,000 in 1920, and from one-fourth of 1 per cent, 
which was the rate of insurance in those times—and even less than 
that—it has reached, in many instances, 15 or more per cent. And 
not only has it reached that high figure, but it has reached the moment 
in which the underwriter refuses to write any risks on pilferage and 
theft, in certain instances. 

I am in constant contact with our members who are interested in 
the Latin American trade, because I occupy, in the National Asso¬ 
ciation of Manufacturers, the position of chief of the Latin Ameri¬ 
can trade department. At the same time, I am in charge of infor¬ 
mation regarding Philippine shipments, in general, and some other 
matters. 

Not long ago, one of our members wrote us a letter asking us to 
give him advice in regard to fall shipments of shoes he had to make 
to the Philippine Islands, and he stated that he had already applied 
to three or four different companies and they had not accepted the 
writing of insurance, but that one of them had recently consented 
. to the writing of that kind of insurance on one shipment as a trial, 
‘at the rate of 10 per cent. As you gentlemen know, the rate of 10 
per cent is prohibitive. If we are going to overcharge the mer¬ 
chandise we are sending to the Philippine Islands, on shipments to 
the Argentine -republic or Uruguay or countries on the west coast 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 209 

of Latin-America, we will be at a great disadvantage against our 
competitors, because our prices are higher, in many respects, due to 
many circumstances, and that increase of 10 per cent on the rate for 
pilferage will make the buying of our goods prohibitive. 

The war, on one side, the excellence of our manufactures, and 
many other conditions which have taken place during the last few 
years, have given to the American exporter many important fields 
where American manufactures are sold nowadays. That is only a 
part of our fair share in the trade of the world, and if that trade is 
not going to be able to be sustained on account of difficult condi¬ 
tions which menace that and other fields, on account of theft and 
pilferage, we have to admit the painful truth that our trade will 
have to disappear, in great part. 

I have here a great many of my companions who will discuss with 
you the Harter bill. I do not think, according to the invitation I 
saw on our bureau, that we were asked to come here and discuss 
the Harter bill. We Avere asked to come here to give our more or 
less authorized opinions in regard to means for meeting that terrific 
condition created by the enormous amount of theft and pilferage. 

We were asked to come here to clear up in tfie minds of the mem¬ 
bers of the committee the doubts that the committee mav have, 
doing that in response to questions asked us by members of the com¬ 
mittee, considering ourselves as expert in those matters. 

If we go into the roots of the subject we find that the Harter bill, 
even taking from it the elasticity, the facility into which it is twisted 
by the special bills of lading, is not the only remedy, because the 
roots are more profound, go deeper down, from the wharf of the 
shipping company to the wharf of the company where the mer¬ 
chandise is going to be delivered. 

The merchandise is exposed to theft and pilferage and is stolen, 
is broken and damaged, from the moment that the merchandise 
leaves the hands of the manufacturer until the emptv case, or onlv 
a part of its contents, arrive in the hands of the consignee. 

If such is the case, and it is admitted generally by everybody Avho 
is acquainted with export trade, it is indispensable to follow that 
same line and to correct all the defects from the beginning to the 
end. That does not mean, on the contrary, that I will oppose any 
arrangement made, so as to take from the Harter bill, as it is to-day, 
that elasticity which allows it to be twisted. I understand that the 
Harter bill, if it was solid, would be perfect, because it is just the 
spirit, the idea, undoubtedly, of the gentleman who presented it to 
Congress, and of the legislators who decreed the same. 

I think if the problem affects as much the manufacturer as the 
exporter, the land carrier as the steamship company, the brokers, 
the lighters, and everybody concerned, even the customer himself, 
all those interests have to be gathered together and put into a single 
hand, and with iron hand contribute to the destruction of the 
processes of such theft and pilferage. 

That well-known and Avell-remembered man, Gen. Gorgas, when 
he was asked to make the Isthmus of Panama a place where laborers 
could li\ 7 e and where work could be done, in order to carry into 
practical operation the great work of the opening of the canal, if 
he had simply advised all the people on the Isthmus to wear con- 

60683—21-14 


210 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


stantly day and night wire masks to protect themselves from the 
mosquitoes, and gloves and other supplies to the same effect, it might 
have diminished to a great extent the evil of yellow fever or an}^ 
other of those diseases which were destroying people. But he went 
to the root of the evil; he destroyed the mosquito at its nest and then 
he destroyed the nest, so no more mosquitoes could ever be spread 
in those places, and the yellow fever disappeared. 

The same thing has to be done here, gentlemen. The evil is gen¬ 
eral, and general is the interest also to eradicate that evil, and general 
has to be the conduct of everybody for the purpose of eradicating that 
evil. The evil in any form, stealing or destroying or damaging the 
merchandise, has to be prosecuted and those doing the evil carried 
before the proper tribunals, convicted, and punished to the full 
extent of the law. That is the only wav to do it, because the rat will 
keep on eating the cheese if we do not kill the rat. 

So I am one of those who thinks that the steamship companies are as 
much interested as anybody else, because if the trade disappears 
because of theft and pilferage they will not have any trade to carry. 
So the interests of all these people—I am talking in the name of the 
National Association of Manufacturers, and if it is good for the 
National Association of Manufacturers it is also good for the Na¬ 
tional Association of Exporters, the National Association of Mer¬ 
chants, and the National Association of Shippers and Steamship 
Companies—go together, and those interests, with the interests of 
the authorities of this country, with the great strength of this coun¬ 
try and the immense resources of this immense country, have to be 
all put together into that work to eradicate entirely this evil, which 
is a shame in a country like the United States of America. We can 
not do in South America as you can do here. Who has ever imagined 
that our little countries down there have the strength, have the facili¬ 
ties, have the means to counteract these terrific conditions, as you have? 
We do say if the French, the Italian, the Norwegians, or any other 
shippers in the nations of the world establish this responsibility or 
that responsibility, that is simply what we may call jurisprudence. 
It can be established here; let us establish it, and let us set the 
example. 

Nobody in the world could eradicate yellow fever until Gen. 
Gorgas eradicated yellow fever, and his action was the action of the 
United States of America. 

Consequently, a policy, not of criticism but a policy of construc¬ 
tion, has to be adopted right away and the absolute cooperation of 
all forces has to be put into effect. 

Among the remedies there is a great list of very interesting things 
which would tend to eradicate the evil. There is the proposition of 
rapid delivery from hand to hand so that the merchandise never 
disappears from the eyes of the interested parties; the sound, strong, 
healthy warehousing facilities, and safety; the careful, delicate 
handling, the careful watching and constant watching, and then 
the responsibility to be passed from hand to hand, according to the 
person who is in actual physical possession of the goods. 

How can I, the manufacturer, be able to follow, step by step, the 
process of my merchandise when it goes out of my hands into the 
hands of the land carrier? Then, after it passes out of the hands of 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 211 


the land carrier, it comes to the steamship company, and after pass¬ 
ing out of the hands of the steamship company it gets to the lighter 
on the other side, and after it comes from the lighter it goes to the 
wharves on the other side, and from the wharves it goes to the cus¬ 
tomhouse, and from the customhouse to the truckman, who deliv¬ 
ers it to the consignee. All of those steps mean merely the mate¬ 
rial eyes and material hands to be watched and to be taken care of, 
and each one of them has to be responsible during the lapse of time 
for the full value of the merchandise until he passes that merchan¬ 
dise to the next one. As I said before, it is indispensable that we 
have investigation for any amount; whether it is a cargo of $ 10 , 000 ‘ 
or only a cargo of $ 10 , there has to be the investigation and prosecu¬ 
tion ; everything has to be done, because there is the rat, and the rat 
has to be killed. And, the rat which is stealing now only $10 is the 
same rat that to-morrow can steal $ 10 , 000 , 000 , as it did in the year 
1920. 

Naturally, as a logical thing, as a common-sense sequence, it comes 
about that if I am liable for the full amount of the treasure I have 
received, or for the little amount of the small thing I have received 
for carrying it part of the way, I will exercise 91 II kinds of diligence 
and all kinds of care in order to avoid having the liability fall on 
myself, and I will see, as rapidly as possible, that the liability passes 
from my hands to the hands of the next man. That is perfectly 
natural. 

Now, it comes to the selection of employees. A man who is liable 
for large amounts of money not only selects his conductor on the train, 
or his captain on the steamer, his truckmen, his stevedores, his sailors, 
everybody—he selects them with great care because it is in the confi¬ 
dence he puts into them that that liability is going to be effective or 
ineffective, and when there is no responsibility that man simply does 
not care. That is, he may merely care, he may be sorry for the conse¬ 
quences, as he may feel in regard to the sufferings of his neighbor or 
friend, and he may exercise that kind of Christian charity, but it does 
not hurt. But the other hurts, it is in the interest of his pocket, and 
consequently, as is perfectly human and natural, he does not exercise 
all the activities and all the energies to avoid such troubles and exer¬ 
cise such Christian charity. 

It is also natural that if the liability is established, the men who are 
exposed to the payment of large sums of money for the destruction 
or loss or disappearance of goods assigned to their care should obtain 
from the man who has given those goods over to their care, a better 
compensation for their trouble. And that is perfectly natural. 

Some of my friends are afraid that if such a liability is established 
or secured by the steamship companies, that the freight charges are 
going to be so excessive that the damages will stop because of the 
lack of carriers or because of the enormous amount paid for such 
carriers. But they have a friend of everybody under conditions like 
that, and that friend, whom we know perfectly well, is competition. 
Competition naturally, tends to level those difficulties; and if the rate 
is excessive and introduces a great deal of money to the carrier, some¬ 
body else will step in who will use that rate, and what will build up 
an enormous and great business? Competition. 

But against the two evils—even supposing that the second evil could' 
arise—against these two evils, which do you prefer, the evil of the 


212 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

closing of markets which have cost the United States so many troubles 
and so many sacrifices to conquer, or the loss, for the time being, 
until competition levels the difficulty, of the carrying of the merchan¬ 
dise in American bottoms? Which is preferable, which is more suf¬ 
ferable for the time being, especially at this moment, when we are 
in the tremendous war of competition, where we are in a second war. 
The old one was the bloody one, and this is the dollar one; the other 
was a question of lives, this is a question of merchandise, of trade, of 
development. It signifies not only the material life, industrial life, 
and commercial life of this country, but also the future of the coun¬ 
try. The countries which sit down beside work to complain about 
their troubles and do not keep on marching, are countries lost en¬ 
tirely. They haA^e to keep on. 

You have already secured good markets. Are you going to aban¬ 
don those markets at this moment only because there is an evil which 
has a strong enough hand to create, diminish, and even make dis¬ 
appear. 

The National Association of Manufacturers hope you will not 
abandon those markets and that some remedy will be found by 
which all those interested will be combined, and all being united 
will destroy the great evil of which we are complaining. 

I thank }mu, Mr. Chairman and gentlemen. 

Mr. Lehdbach. Is there a representative of the National Associa¬ 
tion of Credit Men present this afternoon? If not, we will hear 
Mr. Laws. 

STATEMENT OF MR. FRANCIS S. LAWS, REPRESENTING THE 
INSURANCE CO. OF NORTH AMERICA. 

Mr. Laws. Mr. Chairman, I represent the Insurance Co. of North 
America, of which Mr. Kush is the president. 

I am rather sorry Mr. Englar has gone, because it would be rather 
comforting to have one lawyer here to agree Avith what I haA r e to 
say in regard to the law and the facts. I have not the slightest, 
idea that my learned friend, Mr. Campbell, or Mr. Hickox, will 
concur in anything that I say on either of these points, but not¬ 
withstanding this discouragement I will try to help the committee 
on some of the points of law which have arisen during this dis¬ 
cussion and Avhich I* have taken note of. 

The vieAvpoint from which I start is this. If you will pardon 
this personal statement, I have for some 25 years been engaged 
almost entirely in the trial of transportation cases all oA^er the 
country from Mexico to Canada, inclusive, and from the Great 
Lakes, all along the Atlantic seaboard, down as far as New Orleans. 
I think I have tried or been concerned with all sorts of rail cases, 
all sorts of cargo cases, that can probably arise under bills of lading, 
and I will try to give you my experience in the handling of these cases 
from the standpoint of a practical lawyer. Sometimes I Avin, but 
sometimes I lose. 

To start with, from this vast volume of evidence you have heard 
here as to the reason for the theft and the pilferage losses I do not 
think there can be any real doubt in the mind of any man who has 
listened to the evidence of the fact that this evil has mounted up 
from nominal losses by leaps and bounds until it has gotten to such 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 213 

proportions that it is an immense proposition and it has become an 
actual menace to the export business of this country. I do not 
think any. sensible man will doubt for a moment that this country 
can not exist on domestic consumption alone; it must have an export 
business, and that business has been and is at this tim,e menaced, 
the safety of it put in jeopardy, largely due to the fact that theft 
and pilferage losses and nondelivery losses have mounted to such 
enormous amounts that the shippers can not compete and the buyers 
abroad will not buy, and therefore it is only a question of time, 
by reason of the competition of the other countries, when the export 
business will fall in many lines and almost never be able to be built 
up again as it was before. 

Now, the laws of nature are inviolate. Every effect has its cause; 
there never was an effect that did not have a cause, and the point we 
want to reach now is to find the cause of the evil and correct it at 
once. I say it is a logical conclusion, giving all due allowance for 
the effect of the war and the breaking down of the morale of the 
world—I say it is an inevitable conclusion that we must reach that 
cause of this breaking down, and these enormous theft and pilfer¬ 
age losses are due to the fact that the man whose business it is to see 
that they do not continue and grow is not doing his duty. I think 
that is logical, and I think you will agree with me, that the fellow 
whose business it is to stop that, is not doing his duty. 

Who is the man whose business it is to stop it ? The man who has 
the goods in his possession. You are the shipper, and you can not 
follow the goods; you do not know where they are, but the man who 
has them in his possession knows where they are, and it is his busi¬ 
ness to see that they are taken care of. 

What line of business in this world can be conducted on the theory 
that, notwithstanding lie has paid for the goods, the man to whom he 
sells them must take his chances on getting them or not. There is not 
a merchant here who could sell a dollar’s worth of goods the second 
time to any merchant abroad if he says to that merchant abroad, 
“ Pay me first and take your chances on getting my goods.” But the 
other fellow says, “No, I will only deal with the man who will see 
that I get the goods that I buy.” That is what these steamship com¬ 
panies are doing. They say, “ Pay us the freight.” They insist upon 
the freight. They say, “ It does not make any difference whether 
we deliver the goods on the other side, but you must pay us the 
freight and take all the chances, not only of the natural dangers, but 
the dangers I permit to go on in my establishment,” and that in¬ 
cludes all kinds of thievery, and that is what is being done to-day. 
No other business in the world could be conducted, nor did anybody 
ever have the temerity to undertake to conduct business on any such 
theory as that, except the transportation companies, and at the pres¬ 
ent time the worst of these are the steamship companies. 

Starting with that as a premise, let us go back to a few years ago. 
The original bill of lading was about like this: 

Received on board goods, we will say the Neptune, lying at tbe port of 
London, bound for the port of New York, U. S. A., 24 bales of wool, in apparent 
good order and condition, belonging to John Williams, to be carried to the said 
port of New York, and there delivered in like good order and condition, the 
perils of the sea only excepted, and may God grant safe passage and fair winds. 

John Jones, Master. 


214 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

That is what the bill of lading was in 1700. I have half a dozen of 
them in my office now. 

A bill of lading to-day no man can read without a ruler, and fre- 
quentty a magnifying glass. I do not believe that my learned friends 
on the other side who prepare these bills of lading can take up one 
of them and read it continuously from one end to the other without 
those two things, or one or both of them. 

Why is it that there has been such change in the bill of lading? 
It was a little document; I have bills of lading in my office to-day 
that you have to fold over four times to get them in an ordinary 
folder. What is the change, and what is the justification for it? 

Under the common law it came to be felt that the reasonable limita¬ 
tions, based upon the reduced freight rates, the consideration being 
the reduced freight rates, that it was proper to introduce in bills 
of lading just two elements of a limitation, that it must be supported 
by a consideration, which was reduced freight rates, and it must be 
reasonable. Eeading over those bills of lading, if they were not 
serious, it would be a joke; it would be comical to consider a majority 
of those provisions reasonable. They are absolutely comical, if the 
matter were not serious. 

I say, in addition, that they are not based on a reduced freight 
rate. I do not believe there is a steamship line on the Atlantic sea¬ 
board that has a schedule of rates based upon anything like a scien¬ 
tific calculation of what is just compensation for a common-law. 
liability and a limited liability such as bills of lading contain now 
that they can show to any shipper, and I say that with some degree of 
confidence. 

I have tried a great many cases and I have asked a great many 
people,- representatives of steamship companies and railroad com¬ 
panies, to show me any calculation they have based upon what they 
consider, or what any actuary or any man who is a mathematician 
considers, based upon their experience, is a fair rate to charge for a 
given commodity based first upon a common-law liability and second 
upon limited liability, and I have never seen one yet. 

I tried seven cases in Houston, Miss.,-against a railroad, growing 
out of the destruction of cotton in a compress there. Every bill of 
lading contained a clause reading “ that in consideration of the 
reduced rate at which this shipment is accepted, there is exemption 
from fire,” and a lot of other things. When we came to try that 
case they put their agent on the stand, and they were bluffing^ large 
shippers right along on the theory that this was an exemption so 
that they could not recover. We did not take their word for it and 
we brought suit. They put their agent on the stand. He had been 
there some 30 years. I asked him on the stand u Have you any other 
rate you can give a shipper?” “ No.” “Supposing a shipper asks 
you to give him another rate, can you give it to him?” “ No.” 
“What would be his course of action; what would he have to do? ” 
“ The best he could do would be to go to headquarters.” “ Where is 
headquarters? ” “The headquarters of.the road is at New Orleans.” 
“ You are 500 or 000 miles away from New Orleans. Have you ever 
been able to give anybody that rate? ” “ No.” 

I asked him confidentially afterwards, “ Has there ever been a 
reduction in freight rates to Sound ports since you have been with 
this road? ” the Sound ports meaning the ports on Long Island. He 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 215 


said, “ No/’ I said, “ On what theory can you support this bill of 
lading that you will give this reduced freight rate?” He said, 
“ 1 can not do it.” But he said, “ The officials of the road must be 
able to do it.” That is a fair illustration of what happens/ 

I think that is theory; it is not a fact that the rates in bills of 
lading are based upon even reasonably scientific calculations on the 
risk and of the amount that ought to be charged commensurate with 
the risk, on the one hand, with the common-law liability, and on the 
other hand with the exempted liability. 

Now, my friends have been very much concerned in regard to this 
proposition. My friend, Mr. Campbell, I judge from his examina¬ 
tion of some of the witnesses, seems to be considerably concerned 
about the difficulty of 'determining what proportion of the losses 
occur on the steamship line and what proportion on the railroad 
line. That is not a matter of importance here at all; because, as a 
practical proposition, the carrier—that is, the ocean carrier—can only 
be held liable for the loss which it occasions. We will take care of 
the rail carrier later, and we will take care of the broker later. He 
has not any concern with the broker or rail carrier. We are con¬ 
cerned with the ocean carrier, and we want to find a remedy for this 
situation; we want to find what the remedy againstddm is. 

In the trial of every case we have to furnish the proof with ref¬ 
erence to the goods from the day they were shipped to the moment 
they got into the hands of the carrier. Unless we do that we can 
not hold him responsible. So we call to the stand the packer of the 
goods; we call the man who bound them up; we call the man who 
delivered them to the drayman; we call the drayman and show that 
he delivered them to the steamship company; and we produce, if pos¬ 
sible, a receipt showing that they delivered them in exactly the same 
condition as they got them—that is, they delivered them in that 
condition to the steamship company. Unless that chain of evidence 
is perfect the steamship company need not concern itself at all; it 
makes no difference what the liability is until that chain of evidence 
is perfect. And when it is perfect, it is up to the ocean earner, it 
seems to me, from the most common, ordinary point of view of justice, 
to have the same obligation which any other person has, and any other 
corporation has, to exercise proper care in connection rvith the thing 
with which it is dealing. So they need not have any concern about 
these other people. If the carter loses it, we will get after him; if 
the mail carrier loses it, we will get after him. The carter is a 
common carrier. If the shipper has hot shipped it, we must prove 
what he did. 

When we come to that proposition we get this condition : He con¬ 
fronts us with a document which nobody can read and we could not 
read without the assistance of a ruler or magnifying glass. He says, 
“ You have the option to take an unlimited bill of lading or a 
limited bill of lading.” I say he has not anything of the kind, 
absolutely. No shipper can do*that. Take a shipper in the interior. 
It is impossible for that shipper to go to the seaboard and make 
arrangements for a bill of lading with an unlimited liability. He 
could not do it if he was on the seaboard. Let anybody try to go 
to the steamship company and ask for rates on a given commodity 
with unlimited liability. He could not get it, and shipments would 
cease, for all practical purposes, if he had to do that. They have 


216 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

their bills of lading printed. You take the bill of lading they give 
you; if you do not want it, they will not take your shipment. 

If you t^ke up this proposition you have a bill of lading that is 
what ? I think the premium contract is one of the most complete and 
perfect camouflages that has ever been perpetrated on the shipping 
public. There is nothing to it at all as a practical matter. That 
proposition does not apply if they have an alternate rate on file 
m the Interstate Commerce Commission. Therefore, we get the car¬ 
rier on a bill of lading and a contract which exempts himself from 
negligence. But they say no; he can not exempt himself from negli¬ 
gence ; he is liable for negligence, but only for a limited amount; only 
for a limited amount of his negligence. In other words, they have 
taken really hundreds of y^ears to get to the point where they can, 
in effect, limit negligence by limiting the amount to such a nominal 
sum that it is inconsiderable, and it is not, as I say, based either 
on a reasonable rate nor is it reasonable in its terms. They give 
you a document which in effect limits their liability for negligence. 
Is there any other business in the world, is there any man in the 
world that can limit his negligence or the amount of his liability 
for his negligei ee ? 

Somebody illustrated the question of compensation. A man can 
protect himself against negligence by insurance, but he has to pay it 
himself. I say if a corporation would say it has no concern as 
against compensation loss, and therefore the moral hazard is low, 
it will do everything possible, and the rates are dependent upon the 
amount it has to pay in the coufse of a year, and it will protect 
itself in every way it possibly can to keep the premiums down, but 
there is no business concern I ever heard of that could actually 
exempt itself in effect from liability for negligence and on the other 
hand claim actual benefit of insurance which the other man is going 
to pay for. 

On that point you are touching on an export bill of lading, and I 
am opposed to insurance on an export bill of lading because it does 
what the carrier has been trying to do for years, forcing the shipper 
to insure for the benefit of the carrier, because they add the rate 
of insurance on the bill of lading to the freight. They never pay 
it. They have done it over and over again, where they have an in¬ 
sured bill of lading at one price and an ordinary bill of lading at 
the other price, and invariably they force the shipper to add the 
premium, absolutely. In other words, the carrier is exempting him¬ 
self from liability in effect and trying to force the shipper to in¬ 
sure for his benefit against his own negligence. It has gotten to a 
point of absolute thievery, permissive thievery. I say the carrier 
does not care whether the goods are stolen or not at the present time. 
Let me illustrate that point. 

I have in my office the case of a large shipment of hats by Stetson 
& Co. It was found that those hats were pilfered on the wharves 
in Philadelphia, many of them, great quantities of them, and we 
investigated the matter and found, and our belief was, that the 
Negroes were stealing those hats. We tried to get the carrier to do 
something, but the carrier was not interested. We finally got the 
shipper to have three Negroes arrested. They appeared with very 
able counsel in Philadelphia; one of the political counsel in Phila¬ 
delphia. They appeared before a magistrate. Where they got the 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 217 

money to employ a man of that kind nobody knows, but we have 
our suspicions. The darkies were discharged, and each one of them 
went out wearing a Stetson hat. That is an illustration of how 
little interest the steamship companies have in the matter under 
the circumstances at the present time. They have not any interest 
in it whatever. They do not care what happens. 

One of the cases they rely on is the case in New York, where there 
was a theft of $2,000 worth of stuff. They admitted that the goods 
were stolen by their employees and that their liability was $50. Of 
course the court in New York said that was a perfectly good case, 
and they said “We will pay the $50; that is all that we are liable 
for,” and that is all they ever paid. That case has been cited over 
and over again in support of their proposition. 

I say any business conducted on a vicious and false business basis 
like that ought to be stopped. Any business conducted on a per¬ 
missive basis in which thievery is necessary to support it, and open, 
notorious thievery, is on a false basis and ought to be stopped, 
and now is the time to stop it, and it must be stopped. 

They will come back and say the freight rates must be increased. 
All right; increase the freight rates to a proper extent. They say 
we will be driven out of business. But if they Tan not conduct 
business like that on an honest basis then let them get out of it. 
There will always be somebody who will run ships. If these fellows 
can not run ships on a reasonable, honest basis, let them get out of 
the business. Somebody else will take their places. If the basis 
of their business must be permission to their employees to steal 
everything they can get their hands on, then the business is on a 
false basis, and all of them should get out of it. Somebody else 
will take it up. 

I think Mr. Edmonds raised the question as to whether or not this 
could be corrected by the Interstate Commerce Commission. It can 
not be corrected through the Interstate Commerce Commission. The 
Interstate Commerce Commission has not the jurisdiction to cor¬ 
rect it. The Interstate Commerce Commission is an administrative, 
quasi-judicial body. 

Under the original act and the Carmack amendment of 1906 it had 
certain regulatory powers applying only to shipments within the 
borders of the United States, between the States. The act of 1915 
extended that territorially, among other things, and gave them 
jurisdiction where the shipment was from a point in the United 
States to an adjacent foreign country, but did not extend it and 
never has extended it to a shipment to a nonadjacent foreign country. 
So the jurisdiction of the Interstate Commerce Commission to-day 
ends at the seaboard; it makes no difference whether they have a 
through bill of lading or not. Their jurisdiction ends at the sea¬ 
board, and the Interstate Commerce Commission can not do anything 
to remedy this proposition. They have no control over an export bill 
of lading; they have no control over an ocean bill of lading beginning 
at the seaboard. 

Let us look at the Shipping Board. It was intimated that the 
Shipping Board might do this. The Shipping Board could un¬ 
doubtedly do it as to their own ships. It can not do it, in our opinion, 
as to any ships not belonging to the Shipping Board. They can 
prescribe a bill of lading to apply to all Shipping Board vessels, 


218 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


but when it comes to outside lines they have no jurisdiction. That 
is the general opinion of admiralty lawyers, although the case has 
never been decided. So, in my opinion, the Shipping Board is not 
given control of. a bill of lading to a nonadjacent foreign country 
where the vessel is not a Shipping Board vessel. There is just one 
phase of the legislation, which is very simple, in which the Harter 
Act is very good, so far as it goes. It was intended to go the limit, 
but it has been frittered away by the decisions of the courts by a 
construction that was strained and narrow, and which, as Mr. Englar 
has said, we will guarantee the original preparers of the act never 
intended it should have. It was intended to make the carrier liable 
for the full amount of its liability where its negligence was estab¬ 
lished. That has been done away with, so that now in the event of a 
reduced freight rate it can limit the amount of its liability and 
accomplish the very same thing. I will guarantee that Mr. Englar 
and I can draw a bill eight lines long and attach it to the Carmack 
amendment which will absolutely remedy that condition and pre¬ 
serve to the ship everything it is entitled to, and will not change a 
word in the law but will simply add 8 or 9 or 10 lines to it and 
correct the evil we want to correct, and that is that no carrier shall 
be able to limit the amount of its liability on account of its negli¬ 
gence. Nobody else can do it, and it should not be able to limit its 
negligence, or the amount of its negligence, provided it is established 
that it was negligence, but if it was not negligence it has nothing to 
fear. That is the first thing. 

The second thing is that a reasonable time should be given to the 
shippers to present their claims, and the provisions in regard to that 
are not reasonable. A great many illustrations have been given on 
that. Let me give you one that came under my personal observa¬ 
tion. This was a shipment of underwear; so many suits of under¬ 
wear in a box—a dozen in a box, we will say. Hundreds of dozens 
of these boxes were delivered to a wholesaler abroad. Only a portion 
of each one was taken out—two or three. They went along—they 
were all closed up—to the purchaser, put upon his shelves, sold in 
due course to the retailer, and the retailer in due course sold theni 
to the customer, but it would have been a physical impossibility for 
the wholesaler who bought the goods to stand on the clock and open 
hundreds of dozens of those boxes and count absolutely every suit 
of underwear that was in them. Yet that was what he* would have 
to do to comply with any one of the bills of lading that has lately 
fallen under my observation. It is not practical, and after all 
business is based on practical matters, and it is not possible. 

Speaking of the variety of bills of lading, no two of them are 
alike. We had in our office not long ago a large series of cases of 
damage to cotton growing out of the shipment. There were 40 
different bills of lading, and they came from all over the country, 
in the South, and when the bills of lading were attached to the docu¬ 
ments in the bank they went through the bank, and many of those 
required notice should be given at the ports of customs, some of them 
within 30 days and some less, and they did not get further; they 
were not delivered, some of them, for several months after. The 
very absurdity of a thing of that kind is too apparent to require 
any serious argument. 

Mr. Campbell, Did you say that was valid and enforceable? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 219 

Mr. Laws. The courts have held that provisions requiring notice, 
even most unreasonable notice, as soon as the goods leave the ship’s 
tackle, before they leave the wharf, are valid and enforceable. They 
have sustained that over and over again. Yes: I will say it was 
valid. 

Mr. Campbell. The courts have held that those notices are not 
enforceable and valid unless they are reasonable. 

Mr. Laws. No; I happen to disagree with you on that. 

Mr. Campbell. I will bring you a decision on that. 

Mr. Kirkpatrick. You mean the courts have said in so many 
words that an unreasonable provision or notice is valid? 

Mr. Laws. No; they have said it must be reasonable, but they 
have said that most unreasonable things were valid. 

Mr. C ampbell. They have said the impossible was not reasonable? 

Mr. Laws. No ; they have said many times, over and over again, 
that the provision in the bill of lading that claim must be made as 
soon as the goods leave the ship’s tackle is valid. How could any 
living human being tell what was lost in a shipment of underwear 
before the goods were at least delivered into the hands of the whole¬ 
saler? As a practical matter, that could not be determined until they 
got into the hands of the retailer who was dealing with the party. 

Mr. Kirkpatrick. That was one of the cases which ivould come 
vdthin the limitation. 

Mr. Laws. It seems to us there ought to be a reasonable time under 
the circumstances of the case. 

Mr. Kirkpatrick. I suppose they have some cases which can not 
be provided for at all? 

Mr. Laivs. Absolutely. Another proposition is this question of 
the burden of proof, and I only reiterate what has been said. The 
burden of proof ought to lie where it originally starts. The burden 
of proof ought to be upon the man who loses the thing. Take, for 
illustration, the case of a bank. If you give your money to a bank 
and the bank loses your money, it would be absurd to say that you 
would have to prove the negligence of the bank. The mere loss is 
proof. So I say the loss, the destruction, the stealing, the non¬ 
delivery of goods ought to be sufficient prima facie proof of negli¬ 
gence. 

Mr. Lehlbach. The principle of res obsequitur does not apply to 
a boat ? 

Mr. Laws. No: it does not apply now. I have in my office to-day 
three or four cases of a shipment of clocks, where in one case there 
was a shipment of 11 packages of clocks, and in another case a ship¬ 
ment of 9 packages, and in another case a shipment of 12 or 13 
packages. In the 9-package shipment we did not get a single pack¬ 
age ; in the other shipments we got 2 or 3 packages, probably 5 or 6 
altogether. The value of those clocks, if I remember correctly, was 
something like $16,000. They admit nondelivery of those clocks to 
China, and we can not get a dollar over $100 a package, and yet they 
admit nondelivery of the whole nine cases in one instance, and we 
have not got a single package of that stuff. We can not recover any¬ 
thing beyond $100. I have a pile of claims that high [indicating]. 
I am turning them down. The question is whether they can get any 
recovery. They are not worth anything, and I am sending them 
back to the people they came from. 


220 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


They are all going back because there is no recovery. 1 have to 
tell them that under that provision of the bill of lading they can only 
recover $100; and there is no use in going into an investigation, 
because it will cost more than they could get out of it. 

Those are the points that are important, and you can amend the 
Harter Act. It is a very simple remedy. It ought to be amended 
so that they can not limit the amount of liability for their negligence, 
and the burden should be put upon the* carrier to show that it is 
not negligence. Then there ought to be a reasonable time for the 
filing of the claims. 

What remedy there is for the proposition stated by Mr. Herrick 
that a ship should be compelled to sail on time I am not prepared to 
say. I have never had any cases in which that question was con¬ 
cerned. But if that is a continuing evil, it ought to be corrected. 

Mr. Campbell. I would like to ask Mr. Laws whether he is counsel 
for any steamship owners ? * 

Mr. Laws. No. 

Mr. Lehlbach. Mr. Herrick, you have a telegram you desire to 
insert in the record in connection with your remarks? 

Mr. Herrick. It is along the lines of diversion from the original 
scheduled voyage after a freight contract has been made. This is 
a telegram I have received this afternoon from a packer in Chicago: 

On July 14 we engaged freight on steamship Roma , of Fabor Line, provisions 
to Marseilles. The undertaking was that boat would proceed to Providence, 
R. I., to take on passengers and would proceed thence to Marseilles direct. 
We are now advised that this steamer will sail on 20th from New York to 
Providence; will then proceed to the Azores, Lisbon, Biraeus, Beiruth, then 
Marseilles, in order named. Will discharge only passengers at some of these 
ports and at other ports discharge passengers and cargo. Our cargo consists 
of D. S. meats and lard, all of which are needed at Marseilles; and apart from 
delay which this deviation will impose on our goods, they are likely to reach 
Marseilles more or less out of condition. It seems outrageous that we should 
have no protection against steamship companies handling our products this 
way. You will observe that they go past Marseilles, proceed to eastern Mediter¬ 
ranean, carrying our perishable goods into those hot waters, and making Mar¬ 
seilles last port of discharge. 

That illustrates the question of fact I tried to bring out last 
evening—that the freight contract is a mere scrap of paper. With 
all due care which you may use in selecting your steamer, and sup¬ 
posing that it shall proceed direct to a certain port, the}^ then deviate 
from that, without any chance for protection to the shipper of per¬ 
ishable goods. 

I am obliged to you for this opportunity to read this telegram into 
the record. 

(Thereupon a recess was taken until 8 o’clock p. m.) 

EVENING SESSION. 

The subcommittee reconvened at 8 o’clock p. m., Hon. George W* 
Edmonds presiding. 

Mr. Edmonds. Gentlemeen, I wish to state that to-morrow morn¬ 
ing, the first thing, we are going to hear two of the shippers who, 
unfortunately, have been unable to get here. They have wired they 
are on the road, and I suppose they will be here in time to be heard 
at 10 o'clock. After that, we will proceed with the shipowners. 

Mr. Loines is going to speak to-night, I believe ? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 221 


Mr Loines. A e have been discussing our program, Mr. Chairman, 
and 1 think we will let some of the steamship company representa¬ 
tives, who have come down especially for this hearing, testify to some 
of these questions of fact first. 

Mr. Edmonds. Before you go on? 

Mr. Loines. Yes. 

Mr. Edmonds, T hen we will hear Mr. Hilton now. 

STATEMENT OF ME. FRED E. HILTON, BROCKTON, MASS., REPRE¬ 
SENTING THE BROCKTON CHAMBER OF COMMERCE. 


Mr. Hilton. Mr. C hairman and gentlemen of the committee, I 
represent the Brockton Chamber of Commerce and also the Brockton 
hhoe Manufacturers Association and the New England Shoe and 
Leather Association. Mr. Baldwin, whom yoit heard this afternoon, 
was with me, and really, between ourselves, we agreed that he would 
present most of the argument. I have only two or three thoughts 
that I would like to include. 

One of our large shoe dealers received a notice from one of the 
insurance companies that since they had been doing business with this 
insurance company they had paid losses to the aipount of $50,000 
more than the premiums that this insured company had paid them; 
therefore, they would either have to discontinue this insurance or 
do it on a new basis of 75 per cent. That is one reason that happened 
to get us interested in this change. 

In discussing with the traffic committee the possibility of passing 
this law and thereby putting the burden of proof upon the steam¬ 
ship lines and the railroads of proving that they were not liable for 
the negligence, we admit that if, after trial, they show that they need 
an increased rate to handle this properly, that they are entitled to it. 

At the present time it is necessary for the owner of the propei ty 
which has been lost, damaged, or injured between his shipping floor 
and the consignee’s receiving room to prove beyond a reasonable 
doubt that such loss, damage, or injury actually occurred while the 
shipment was in the hands of the carriers. In other words, it becomes 
necessary for him to prove to the satisfaction of the carrier that the 
loss, damage, or injury claimed did not occur prior to the time that 
the bill of lading was signed at point of origin or subsequent to the 
time that the goods were delivered at destination. This clearly places 
the burden of proof upon the owner of the property and not upon the 
carrier, who is the party in possession while the property is in transit. 

The Cummins amendment provides that if the loss, damage, or 
injury was due to delay or damage while being loaded or unloaded, 
or damaged in transit by carelessness or negligence, then no notice 
of claim or filing of claims shall be required as a condition precedent 
to recovery. Otherwise, claims must be made in writing to the origi¬ 
nating or delivering carrier within six months after delivery of the 
property (or, in case of export traffic, within nine months after de¬ 
livery at port of export), or, in case of failure to make delivery, then 
within six months (or nine months in case of export traffic) after a 
reasonable time for delivery has elapsed. 

It follows that the owner of lost or damaged property can not know 
whether the fault developed while the property was being loaded or 


222 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

unloaded, or was due to carelessness or negligence on the part of the 
carriers. As the various carriers make a practice of disclaiming care¬ 
lessness or negligence on the part of their employees, it becomes neces¬ 
sary for the owner to file his claim within the six months’ period or 
prove that his loss was due to the causes enumerated above. 

The Cummins amendment was fathered by a live-stock man and all 
authorities seem to agree that it w T as drafted to protect the live¬ 
stock shipper, with apparent disregard to shippers of other products. 

To illustrate, it is not uncommon for live stock to escape from 
loading platforms or chutes, nor is it out of the ordinary for 
stock to become injured during the process of loading or unload¬ 
ing. In either case it is not impossible to ascribe a cause for the 
loss or damage. On the other hand, loss or damage to freight other 
that live stock, specifically located and ascribed to any one par¬ 
ticular cause, is almost always out of the question. 

I referred to the live-stock question largely from this reason; it 
is a custom in handling such shipments to have somebody present, 
perhaps the owner of the live stock, while it is being loaded onto the 
cars, and, down at the other end, then somebody present who is 
going to receive it, which is not true with hardly any other class 
of shipment. 

Such loss or damage (referring to freight other than live stock) 
might occur in numerous ways, while the property was in the hands 
of the carriers, and it would be manifestly impossible for the owner 
to prescribe a cause w T ithin the meaning of the act. It is obviously 
unfair to expect the owner to know where the loss or damage hap¬ 
pened and to advise the cause, when we remember that the carrier 
was the party in possession and that the shipment had been out of 
the shipper’s hands for some time. 

The other questions I had were covered by Mr. Baldwin, and I 
will simply include in the record that these three organizations that 
I represent want to go on record for some bill which will change the 
burden of proof to the one in possession of the goods, so that that 
business will be conducted as practically every other business in 
the United States is conducted. 

I thank you. 

Mr. Edmonds. Are there any questions, gentlemen? If there are 
no questions we will call Mr. Ralph B. Jones. 

STATEMENT OF MR. RALPH B. JONES, MEMBER OF THE NEW 

ENGLAND SHOE AND LEATHER ASSOCIATION AND OF THE NEW 

ENGLAND WHOLESALERS’ ASSOCIATION. 

Mr. Jones. I am at present connected with W. LI. McKelway & 
Co. and am also a member of the New England Shoe and Leather 
Association and of the New England Shoe Wholesalers’ Association. 

Mr. Chairman, when I found on Saturday noon that I was to 
come here I felt that I wanted to give something more than merely 
another rehash of the same argument, so I endeavored to get together 
some figures. To get out a questionnaire to the members of this 
organization and get it returned by Monday evening was impossible* 
so I sat down with five of the member concerns and went over it 
with their traffic managers and export managers, and they gathered 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


223 


together figures which, I think, are both interesting and repre¬ 
sentative. 

These five concerns in 1920 had exported on old, well-established 
steamship lines a total of approximately a little bit under $4,000,000. 
At the same time they had filed claims for pilferage loss to the extent 
of $137,000. That is a little bit less thffn 3J per cent of the amount 
shipped, for which they had filed claims. I was not able to find out 
just what they had paid in freight on that; but for the firm I am at 
present connected with that was about 15 per cent more, in our case, 
in claims that we had filed for pilferage on these old-established lines 
than the freight we had paid. 

In addition to that, on freight not delivered to our customers, 
which they wanted to have delivered and that they had bought, I 
separated the figures and tried to get the difference between the old- 
line well-established companies that are conscientiously doing the 
best they can under the circumstances to deliver merchandise cor¬ 
rectly and some of the more recently established lines. In saying 
that they are doing the best they can under the circumstances, I do 
so with a little reservation. If they were personally responsible for 
the merchandise they might put a little more push and pep behind 
their efforts; but I do not for an instant claim that they are careless 
in a thoughtless and unfair sense at all. 

Now, then, on the other lines I was not able to get sufficient figures 
to be fair to present them, except in the case of the organization with 
which I am personally connected—that is, W. H. McKelway & Co. 
Out of 130 shipments made on different vessels, belonging to three 
comparatively new steamship companies, we shipped in those 130 
shipments 65,540 pairs of shoes. We filed claims for pilferage for 
over 35,000 pairs of shoes out of the 65,000; or on a total valuation of 
$308,000 we filed claims for $166,000 for pilferage loss. 

Mr. Edmonds. Where were those shoes going? 

Mr. Jones. Those shoes were going to Cuba. The condition in 
Cuba was exceptionally bad at that time, and the vessels were de¬ 
layed in leaving the ports in this country for from four to six weeks, 
and in some cases, I believe, as much as three months, lying around 
Newark—principally Newark—because the lines we used to the 
greatest extent sailed from Newark. 

Mr. Campbell. What year was that ? 

Mr. Jones. Nineteen hundred and twenty. And in the case of the 
last two boats to unload—I know the name of one of them was Butte- 
town , and I think the other was the Sunelco —there was approxi¬ 
mately $100,000 worth of merchandise belonging to us on those boats. 

Now, we had had such an unfortunate experience Avith pilferage 
loss before, and such a difficult time in having our claims filed with 
the steamship company, that in order to protect ourselves and assist 
the insurance company we had our representative go to the docks as 
those boats were unloaded, get the consignee, and see to it that the 
papers were properly drawn^carefully—to have the representative 
of the steamship company, of the customhouse, and the consignee 
all there, get the facts in shape, and file the claim immediately with 
the steamship company, so that we would carry out all the clause? 
demands and that we should file that claim within 24 hours otr 48 
hours, whichever the case might be. *Then, having done so, as we 


224 THEFT, ETC V OF EXPORT AND IMPORT SHIPMENTS. 

were covered by insurance, in order to collect our insurance we with¬ 
drew those claims from the steamship company, to be filed in this 
country with the insurance company, and we were pleasantly advised 
that as long as we had this insurance they were free from all fur¬ 
ther obligation for losses amounting in that case to $58,000 on those 
two ships. 

Now, that is the situation; that is what we are up against. We 
believe it is dead wrong; we believe the only way ive can get at a 
solution is through adequate legislation. As far as the legal techni¬ 
calities of this law are concerned, I am not equipped to talk; I do 
not know anything about it, because I am not a lawyer. But here is 
a situation which you can see is vicious and, if we are to continue in 
the export business, it has got to be taken care of. Even if it costs 
us more freight, I do not believe the steamship companies would 
raise the rate 100 per cent on account of that additional cost; but 
at present it costs us more than 100 per cent for our pilferage loss— 
even on the well-established, reputable lines—and, besides that, not 
delivering the merchandise to our customers that they have bought 
and that they want. Now, we ask for this adequate legislation and 
sincerely urge that we can have it. 

Mr. Edmonds. Do you lose your customers when you deliver goods 
like that, where such a large percentage of your goods are not de¬ 
livered ? 

Mr. Jones. In the case of the condition in Habana, our representa¬ 
tive there worked that very carefully. Under ordinary conditions, 
I should say, 3^es; but what he did was to gather these shipments 
together and take them into his warehouse and peddle them out to 
the customers, making this customer’s invoice complete and releasing 
another customer entirely, and in that way he managed to get the 
shipments that came in on those Trans-Marine Corporation vessels 
down to a point where his loss was only eight or ten thousand dollars 
on shipments of a little over $200,000. I think he handled the situa¬ 
tion remarkably well. 

Mr. Edmonds. You have still got the goods down there? 

Mr. Jones. No; they were delivered. About half of our cus¬ 
tomers got complete delivery by this salesman’s juggling of the situa¬ 
tion, and the other half got an entire release from their invoices, 
and nothing was delivered at all, and we got our money. 

Mr. Edmonds. I would like to ask you about those two boats, the 
names of which 3*011 mentioned that were lying around Newark for 
some time. Were the goods on the boat, or where were your goods? 

Mr. Jones. We had a clear ocean bill of lading from the steamship 
company and that is all we know. Presumably they were loaded in 
the hold of the boat, but we do not know that. 

Mr. Edmonds. But they were in the custody of the steamship 
company, either on their pier or in the boat ? 

Mr. Jones. Absolutely. 

Mr. Edmonds. You do not know whether they were on their pier? 

Mr. Jones. No, sir. 

Mr. Edmonds. Maybe they were out on the railroad still. 

Mr. Jones. They had given us their ocean bill of lading, and pre¬ 
sumably they; do not issue it until they get possession of the goods. 
They placed it through our forwarder* in New York. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 225 

'Mr. Edmonds. Still, you do not know what a steamship company 
does; they do many queer things. 

Mr. Campbell. I would like to ask the name of the company ? 

Mr. Jones. I belieA T e the Buttetown is owned by the Trans-Marine 
Corporation. 

Mr. Campbell. How long has that company been in the shipping 
business ? 

Mr. Jones. That is a comparatively recent company. That is 
the reason, in giving the figures, I separated them for the old-line 
reliable companies who I believe are doing the best they can, and 
those which have just gone into the business recently. 

Mr. Campbell. How does it come that you shipped your valuable 
shoes on a line that had just gone into the shipping business? 

Mr. Jones. As we are not exporters in very large quantity—our 
exports amounted last year to a shade under a million dollars, that 
is, 1920—we do not have any elaborate traffic department. We go 
by what our forwarder saj^s, and we understood the forwarders 
handling these goods in New York were competent people, and we 
took their O. K. on those lines. And then our insurance company 
investigated the vessels that were used by the lines and passed on 
them, and therefore we washed our hands of it at that time. 

Mr. Campbell. The Boston Marine Insurance Co. did that busi¬ 
ness for you? 

Mr. Jones. Yes. 

Mr. Campbell. And you relied on the word of your freight for¬ 
warder at New York? 

Mr. Jones. I do not know how they looked the ships up. 

Mr. Campbell. You did not hear the question. Do you rely on 
the representations of some freight forwarder in New York as to 
the responsibility and character of the company by which you for¬ 
ward your shipments? 

Mr. Jones. Yes. 

Mr. Campbell. Why did you not ship by some of the old estab¬ 
lished lines? 

Mr. Jones. Because there was no cargo space. We ordinarily 
ship by the Ward or United Fruit, and would at that time if there 
had been cargo space. 

Mr. Campbell. And they could not take your goods? 

> Mr. Jones. Not at that time. 

Mr. Campbell. Did you not know that an awful condition existed 
in the harbor of Habana? 

Mr. Jones. We knew the conditions existing in the harbor at 
Habana; yes. 

Mr. Campbell. Were you advised at that time that there were 90 
vessels that had been detained down there for weeks and months in 
that harbor unable to discharge their cargoes? 

Mr. Jones. Yes. 

Mr. Campbell. And did you inquire at all into the condition that 
existed in the port of Habana with respect to the warehouse facili¬ 
ties? 

Mr. Jones. Yes. 

Mr. Campbell. And were you fully aware of the condition that 
existed there ? 

cor,83—21-15 


226 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Jones. Yes. 

Mr. Campbell. You knew all that? 

Mr. Jones. Yes. 

Mr. Campbell. And yet in the face of that you sent down this 
valuable cargo with an entirely new T shipping company ? 

Mr. Jones. Of course during all that time we had advices from 
Habana urging us that the situation would within a length of time 
clear up. Now those advices always turned out to be mistaken. 

Mr. Campbell. How did you first come to know of these losses; 
what was the first intimation you got of your losses? 

Mr. Jones. Well, when the merchandise was delivered to the cus¬ 
toms house and our customers endeavored to get the merchandise 
through the customs house they found they were shy. 

Mr. Campbell. Can you tell the committee how many days or how 
many weeks those goods laid in the custom house before your cus¬ 
tomers got access to them ? 

Mr. Jones. In the case of those last two steamships probably less 
than 24 hours. 

Mr. Campbell. What about the others ? 

Mr. Jones. And in the case of the steamships that were down there 
earlier in the season the steamship Krakow , which had a little fire in 
Habana that probably laid in the harbor there for anywhere from 
two to three months and some of the merchandise was on the lighter. 

Mr. Campbell. Do you know how long your goods were com¬ 
pelled to be on the lighter in Habana Harbor before they could 
discharge even at the custom house? 

Mr. Jones. No; I do not. 

Mr. Campbell. From those two steamers ? 

Mr. Jones. From those two steamers my understanding is that 
they were not on lighters at all- 

Mr. Campbell. All cargo has to be lightered in Flabana. 

Mr. Jones (continuing). Because those two steamers were down 
there at the very end of the difficulty and there was no attempt made 
to unload them. I know we had to get reports in order to reinsure 
for the delay in delivery, and the report made no mention of the 
unloading having been delayed. 

Mr. Campbell. You stated that the old-established companies had 
done very well. I think you went so far as to say they had done all 
that they reasonably could. 

Mr. Jones. I believe that if they felt the keen responsibility—in 
the case of this $4,000,000 worth of merchandise that was shipped on 
the old-line companies, and on which there were filed claims of ap¬ 
proximately $137,000, if they saw where they would have to pay 100 
cents on the dollar, or the whole $137,000, there might have been a little 
more punch behind that care. 

Mr. Campbell. I would like to have you tell me what you mean by 
punch. What could they have done that they did not do ? 

Mr. Jones. I am not a shipping man and I do not know how to run 
their game; and they might not know how to run my warehouse. 

Mr. Campbell. You have been making these export shipments and 
you are now here criticizing the shipping companies, and before you 
do that you ought to have some facts on which to base your criticism, 
and I want a practical suggestion from you; because we are just as 
much interested in this question as you are. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 227 


Mr. Jones. I realize you are. 

Mr. Campbell. And wliat is it they did not do that they should 
have done, in your opinion? 

Mr. Jones. \ on would have to investigate that from the inside of 
the different organizations. It would be an impertinence for me to 
tell you, even if I thought I knew, and I do not think I do. 

Mr. Edmonds. Mr. Jones, you are not a steamship man? 

Mr. Jones. Xo, sir. 

Mr. Edmonds. You forwarded your goods in the ordinary manner, 
through some forwarding agent, and he was presumed to do your 
steamship business for you ? 

Mr. Jones. Yes, sir. 

Mr. Edmonds. And you picked out a steamship line that had room 
to carry your goods? 

Mr. J ones. Yes. sir. 

Mr. Edmonds. And the natural presumption was they would carry 
the goods ? 

Mr. Jones. Yes. sir. 

Mr. Edmonds. Otherwise you would not have put them on? 

Mr. Jones. Yes. sir. 

Mr. Edmonds. And when they got on you were in trouble? 

Mr. Jones. Yes, sir. 

Mr. Edmonds. And that was on account of the steamship com¬ 
panies? 

Mr. Jones. Yes, sir. 

Mr. Edmonds. That is simple. [Laughter.] 

Mr. Rush. May I say something about the acceptance of goods 
when the steampship company knows of the congestion. A company 
of Avhich I am president won a case some 10 or 12 years ago when it 
was held by the court that the delivery and acceptance of goods by a 
steamship company when it knew it was impossible to transport them 
on account of an embargo, was in itself negligence. 

(The following letter was ordered printed in the record:) 


Transmarine Corporation, Port Newark, 

] Newark , N. J., August 16, 1921. 


Chairman Subcommittee on Marine Insurance, 

House of Representatives, Washington, D. C. 


Dear Sir : Our attention has been drawn to certain statements made before 
your committee by Ralph B. Jones, representing W. H. McKelway & Co., in 
regard to theft and nondelivery of merchandise shipped to Habana, Cuba, on 
vessels referred to as belonging* to the Transmarine Corporation. 

The steamer Buttetown mentioned by Mr. Jones has never been owned or 
operated by the Transmarine Corporation, and, as far as can be ascertained, no 
vessel of this name has cleared from Port Newark since the initiation of our 
service. Neither have we owned or operated the Sunelco referred to by Mr. 
Jones, though one of our steamers, the Sunelscco, operates between Port 
Newark and Habana. A diligent search of our records, however, fails to dis¬ 
close any shipments of merchandise on this or any of our other steamers for 
W. H. McKelway & Co. or any firm of similar name. 

We shall appreciate the insertion of this letter in the record of the hearings 
before the subcommittee. 


Very truly, yours, 


B. L. Worden, 

Vice President and General Manager. 



228 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

STATEMENT OE MR. W. C. MITCHELL, NEW YORK, N. Y., CHAIR¬ 
MAN OF TRAFFIC COMMITTEE OF TANNERS’ COUNCIL. 

Mr. Mitchell. Our organization represents all of the tanners or 
leather manufacturers in the country. Here is a list which I would 
like to file with the committee, and also a copy of our by-laws. 

I did not have an opportunity to send for all the statistics, owing 
to the shortness of time; but I know that all of our people have 
suffered from pilferage, and that is what I came here to'talk about— 
theft and pilferage. Six of our shippers have reported the follow¬ 
ing losses: $1,693, $2,394, $12,802, $513, $1,099, $265, $2,898, $25,000. 
and $1,231,000. We feel if some suitable legislation were passed 
that these losses would decrease; in fact, we know they would. 
But in order to be fair, I would like to state that I know a lot of 
this pilferage, to a certain extent, happens before the steamships 
get it. I happen to know that in New York Harbor, leather shipped 
in carloads is lightered, and I happen to know that a.lot of the 
losses occur on the lighters. I proved that conclusively by cutting 
out railroad lightering and hiring my own lighter and putting my 
own men on the job, and the losses stopped. 

We had a case of a lot of leather going to Europe where there was 
a report of about a half of it missing. I knew that in order to steal 
a bunch of leather like that, they had to have some place where they 
could conveniently open the bales and do the work. I did not feel 
it could be done in the ship, but I did feel it could be done in the 
lighter. I hired a detective in New York to look up this leather, 
giving him a sample of it. He was on the job for two months and 
did not find anything. I then called all the salesmen in and I told 
them to go around and visit around among the different leather 
stores in New York and see what they could find. I knew the leather 
was specially made for Europe; I knew it was specially marked. I 
found the leather. I succeeded in fixing the responsibility on the 
railroad and I collected the claim. The railroad undertook to prose¬ 
cute the thieves and one fellow bought it from another fellow, and 
that fellow bought it from another fellow, who bought it from an¬ 
other fellow, and in chasing the chain down the last fellow had died. 
[Laughter.] 

I had another case like that, and I went through the same pro¬ 
cedure. 

Commissioner Lissner. Where did you discover it was stolen? 

Mr. Mitchell. Why, it was cabled to us when the ship arrived. 
Commissioner Lissner. In what place was it stolen and under 
what circumstances? 

Mr. Mitchell. It was stolen off the lighter. You .mean the one I 
fastened on the railroad? 

Commissioner Lissner. l^es. 

Mr. Mitchell. It was undoubtedly stolen off the lighter. 
Commissioner Lissner. Where? 

Mr. Mitchell. In New York Harbor. The reason I know that is 
because by tracing the chain from one fellow to another. I was able 
to demonstrate bv the dates, one of which was Christmas, and I very 
definitely remember it, the steamer did not have it loaded on board 
at that time; they did not get it until afterwards. You see, they gave 
the railroad a clean receipt for a certain number of bales; they did 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 229 


not know how much leather they had; they did not weigh it, and did 
not know anything about it. 

I had another case like that and I went through the same pro¬ 
cedure, but I was not able to get anywhere, although I went to a 
store in New York City and took 4G6 pounds of leather away from 
the fellow who had it in the store. I was able to prove the leather 
was ours, and we took possession; but in tracing it back from one 
fellow to another fellow, the last one had died. [Laughter.] 

Mr. Edmonds. Do they always die when they steal something? 
[Laughter.] 

Mr. Mitchell. I do not know. I believe that is about everything, 
gentlemen. 

(The following statement was ordered printed in the record:) 


Tanners’ Council of. ti-ie United States of America, 

New York, N. Y., July 28, 1921. 


Hon. Frederick R. Lehlbach, 

House of Representatives, Washington, D. C. 

Dear Sir: On Tuesday, the 19tli, I was in Washington and appeared before 
your special committee with reference to theft and pilferage in New York 
Harbor. At that time those present were requested to write to the committee 
if they wished to make any suggestions. 

I am sending you herewith a memorandum that I have drawn up with the 
help of some others in New York, making suggestions along the line of im¬ 
proving the steamship and railroad service and protecting freight in transit. 
I am sending you this as information for what it may he worth to your com¬ 
mittee. 

Yours, truly, 


W. C. Mitchell, 
Chairman Traffic Committee. 


In order to reduce losses from theft and pilferage via rail or water routes in, 
to, or from the United States of America— 


MANUFACTURERS AND SHIPPERS. 


Improve packing. 

Employ responsible shipping clerks. 

Use only responsible bonded truckmen. 

Use serial numbers on all machinery. 

Identification marks or numbers to be placed on boxes, barrels, or packages. 
Use of second-hand boxes, barrels, or casks should be discontinued. 

Use of frail cases should be discontinued. 

Too heavy packages break from own weight. 

Shippers should be particular not to put too much weight in a single box. 
Ordinary foreign ports can handle only 250 pounds easily. 

Too heavy boxes cause loss and pilferage account breakage. 

Some arrangement should be made with railroads and steamships for sepa¬ 
rate receipts for different truck loads delivered. 

Misdescription of freight should not be tolerated. 

Prosecute cases of theft or pilferage. Use every available means. 

Arrange with carrier if package is delivered to railroad or steamship in a 
damaged condition that carrier will notify the shipper at once and not let 
damaged package be forward. This will tend to assist shippers to get clean 
receipts. 

All packages should be separately numbered and distinctly marked. 

THE EXPORTER AND IMPORTER. 

Improve packing by cooperation with manufacturers and shippers. 

Discontinue selling ex dock where practicable and warehouse all goods 
promptly as possible. 

Discontinue using second-hand boxes, barrels, and casks. 



230 THEFT, ETC V OF EXPORT AND IMPORT SHIPMENTS. 


Use no frail cases—only strong, first-class packages. 

Give separate orders to truckmen f(fr each truck load of freight. 

Discontinue misdescription of all articles shipped in order to prevent fraud 
and allow carriers to take proper precaution. 

Employ only responsible bonded truckmen. 

Start propaganda with foreign shippers and consignees to get them to assist 
in every way to keep down pilferage and theft by proper packing, marking, de¬ 
scription, etc. 

Too heavy packages break from own weight. 

Shippers should be particular not to put too much weight in a single box. 

Ordinary foreign ports can handle only 250 pounds easily. 

Too heavy boxes cause loss and pilferage account breakage. 

Some arrangement should be made with railroads and steamships for separate 
receipts for each truck load received or delivered. 

Prosecute all cases of theft or pilferage. Go the limit. 

Arrange with carrier if package arrives or is delivered to carriers in damaged 
condition to receive direct notice at once so that some steps can be taken im¬ 
mediately to protect loss. 

Arouse foreign interests in this campaign and get their help and cooperation. 

INSURANCE COMPANIES. 

Improve foreign settlement agency service. 

Agree to charge differential rates on liners as per theft classification. 

Inspect packing of each of the companies insured. 

Cooperate with steamship companies to secure greater responsibility, both 
financial and otherwise. 

To secure stricter supervision of cargoes on piers. 

Improve watchman service on piers and lighters. 

All cases of pilferage or theft should be followed up and prosecuted to the 
limit. 

Try to get laws passed fixing the carrier’s responsibility, at all times cooperat¬ 
ing with shippers. 

Arouse foreign Governments to a sense of their responsibility and need of 
improving matters for their own protection. 

Start a publicity campaign so everybody will know how serious conditions are. 

To enforce packing rules. 

To accept no packages in bad condition. 

RAILROADS AND STEAMSHIP LINES. 

Should assume their just liability and protect shippers and consignees. 

Should secure stricter supervision of cargoes on station platforms, lighters, 
and piers. 

Should improve watchman service over all cargoes and freight on all piers 
and lighters. 

Should enforce stricter rules regarding packing. 

Should accept no packages in bad condition. 

Should employ more and responsible checkers. 

Should notify at once all exporters, importers, shippers, or consignees if ship¬ 
ments are in bad order. 

Steamships should properly stow all cargo so it can not be tampered with or 
damaged in transit, and shoud be careful not to book freight in excess of carry¬ 
ing capacity. 

Should not accept frail packages or recoopered packages and such receipts 
are often not warranted and give thieves their opportunity. 

Should proceed against all thieves. Prosecute to limit. 

Should cooperate with all shippers and receivers of freight and see that sepa¬ 
rate receipts are given for each and every truck load. 

Should exercise every precaution to see that trucks and freight are not need¬ 
lessly delayed. 

All packages recoopered should be kept separate and secure from- thieves. 

Steamships should provide strong room for extra valuable freight and see that 
captain is responsible. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 231 


Carriers should not sell freight at destination without fully trying to reach 
all interested and get proper authority. 

Steamships should organize and adopt strict package rules and abide bv their 
regulations. 


POLICE DEPARTMENT AND DEPARTMENT OF JUSTICE. 

Police should enforce rule prohibiting junk boats to ply North and East 
Rivers or any harbor. 

Police should use every effort to get at and destroy all fences. 

Shippers and receivers of freight, also insurance companies, should cooperate 
with railroads, steamship lines, American Railway Association, owners of boats 
and lighters, also with responsible heads of labor unions and police department 
to see that full 1 , publicity is given and all possible protection afforded all 
freight. 

Police should cooperate with carriers and provide protection to all property 
even to extent of policing piers and docks. 

Shippers through this organization should start some police work of their 
■own and see that the services of irresponsible people are dispensed with. 

Shippers should help the police department every possible way to secure ar¬ 
rests and convictions. 

Shippers should see that district attorney and assistants are aroused to the 
seriousness of this matter and extra effort made to convict criminals regardless 
of personal records. 

Shippers should see that laws are passed to afford protection to freight in 
transit and carriers accept full responsibility. 

STATEMENT OF MR. J. C. NELLIS, BALTIMORE, MD., ASSISTANT 

SECRETARY NATIONAL ASSOCIATION OF BOX MANUFACTURERS, 

CHICAGO, ILL., AND SECRETARY, NORTH CAROLINA PINE BOX 

AND SHOOK MANUFACTURERS’ ASSOCIATION, BALTIMORE, MD. 

Mr. Nellis. The National Association of Box Manufacturers is 
interested in the matter of export losses through pilferage, breakage, 
etc., because box manufacturers make many of the export boxes used. 
Having prepared this statement after sitting through the first two 
days of this hearing, I have the impression that pilferage is perhaps 
more important than breakage. 

While boxes can probably be made theft proof, a theft-proof box 
would most likely be too expensive, and it would seem better, in¬ 
stead, to design and construct boxes which would be theft indicative. 

The National Association of Box Manufacturers, with headquar¬ 
ters in Chicago and branch offices in the East and West, is interested 
in the design and construction of stronger and lighter boxes. We 
have had principally in mind the hazards of transportation within 
this country, together with the increasing freight rates, and have 
therefore sought to make boxes lighter as well as stronger. Tests 
have been conducted for several years, and the results to date all in¬ 
dicate that boxes may be constructed with no more and very often 
less lumber than previously used, practically always with additional 
nailing and sometimes with strapping, and be greatly increased in 
strength. While it might not be desirable in general to seek lighter 
boxes for exports, the large amount of data now available and tests 
on boxes and strapping now under way would, I believe, allow us to 
suggest changes in the design of many export boxes and make them 
stronger. 

The National Association of Box Manufacturers cooperates in box 
testing with the forest-products laboratory of the United States For¬ 
est Service. Most of our box testing is done at the forest-products 


232 


THEFT, ETC., OF EXPORT AX'D IMPORT SHIPMENTS. 


laboratory, and we put the results of laboratory tests into practical 
application to make sure of their adaptability to manufacturing con¬ 
ditions and final use. As an example of such tests I submit the 
standard schedule for nailing boxes which is based upon laboratory 
tests, manufacturing conditions, and actual usage. This schedule is 
intended to develop the full strength of joints in boxes. Previous^, 
or perhaps generally now, boxes were not nailed sufficiently. 

The schedule for nailing boxes which I have referred to was pre¬ 
pared for domestic use, but can be readily converted to export use 
by decreasing the nail spacing by one-half an inch. 

There are numerous scientific details regarding box construction 
with which the average box user is unfamiliar, and if the committee 
wishes I can discuss scientific box construction in some detail and 
would be glad to answer particular questions. It might be pertinent 
to say that export boxes can probably be built strong enough to with¬ 
stand all possible hazards and also be theft proof, but the cost might 
be prohibitive. Doubtless, boxes strong enough for the usual hazards 
of export and so constructed as to be theft indicative can be designed 
and constructed at reasonable cost. Our experience with domestic 
boxes is that they may be strengthened with little additional cost, 
and very often when a box has been wrongly designed and contains 
too much lumber and too few nails, it has been possible to use less 
lumber and more nails and make the box* not only stronger but 
lighter. May I pause there to mention a box which a man mentioned 
this morning. He said he made his box out of inch and a quarter 
lumber. If he did not have enough nails in it, it was not properly 
constructed; it would be no stronger than a box made out of half- 
inch lumber. 

I should point out that in testing boxes, Ave aim to make them 
eequallv strong in all parts and joints, Avhicli we call balanced construc¬ 
tion. It is the old story of the strength of a chain depending on the 
strength of the Aveakest link. Tests are made in a revolving hexagonal 
drum which has slides and baffles so arranged as to simulate prac¬ 
tically all the hazards encountered in transportation, and during the 
course of a test the box falls on every side, every corner, and every 
edge. Separate compression tests and straight drop tests are also* 
used. 

As a matter of interest at this hearing. I should like to mention that 
the North Carolina Pine Box and Shook Manufacturers’ Association, 
of which I am secretary and which is directly affiliated with the 
National Association of Box Manufacturers, had last Aveek an exhibit 
at the marine sIioav and export and import exposition in Baltimore. 
This exposition Avas a combination of the marin'e show of the Ship¬ 
ping Board and an export and import exposition Avorked up by the 
Export and Import Board of Trade of Baltimore. Our exhibit con¬ 
sisted of a number of properly constructed export boxes and crates,, 
the standard mailing schedule in leaflet and wall form, charts show¬ 
ing the results of laboratory tests, a model of the forest products 
laboratory box drum, etc. 

I submit photographs of our exhibit and of the box testing drum 
at the forest products laboratory. The laboratory drums are 7 and 
II feet in diameter/ If the committee desires, I would be glad to file 
other photographs of box testing. Apparatus charts of comparative 
results of one series of box tests are also submitted. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 233 

I would be glad to answer any questions; otherwise, I do not care 
to take any mor& time. 

Mr. Edmonds. You did not mean to use that in connection with Mr. 
Robinson’s bill of lading, did you? 

Mr. Nellis. I know nothing about that. 

Mr. Edmonds. You do not want an amendment to the Harter Act 
to use these boxes? 

Mr. Nellis. 1 do not; no, sir. 

Mr. Loines. This is a very interesting subject—of the package. 
Have you, Mr. Nellis, made any study or tests of the ordinary box 
used in commercial shipments of manufactured products? 

Mr. Nellis. IV e have tested canned-goods boxes; we have tested 
shoe boxes. Those are the large lines which have been tested in re¬ 
cent years. 

Mr. Loines. As a result of your tests of the ordinary box, do you 
consider the package normally sufficient .or the export package suf¬ 
ficient, for what it has to go through in order to arrive ? 

Mr. Nellis. We have not tested export packages. 

Commissioner Lissner. You spoke, Mr. Nellis, of theft-proof boxes 
and theft indicators. Would you mind elucidating on that? Ex¬ 
plain just how you can make a box theft proof and what practical 
methods you use for making them theft indicative. 

Mr. Nellis. I do not believe a box can be made theft proof unless 
3 t ou go to so much expense that it would be too costly. 

Commissioner Lissner. How would you do it ? 

Mr. Nellis. I would not like to make a box theft proof; I do not 
think we would try to do more than design a box to be theft indica¬ 
tive. 

Commissioner Lissner. How would you do that ? 

Mr. Nellis. There are several methods. There are probably meth¬ 
ods we have never thought of. I think, perhaps, the best thing to do, 
other than proper nailing and proper strapping, would be to fasten 
all boards from the inside with corrugated fasteners. If you do not 
know what corrugated fasteners are, they are little thin strips of 
metal about an inch long and varying somewhat, with a knife edge 
at one edge and made corrugated, which are driven into the two 
boards at the joint. You fasten the boards on the inside with those 
corrugated fasteners. A thief can pull the nails out and try to slide 
a board out from under the strapping, but these fasteners will hold it. 
He may drive this out with a chisel or something, but it will show. 

Commissioner Lissner. You speak of fastening them from the in¬ 
side; just what.do you mean by that? 

Mr. Nellis. It has to be done when the box is made. 

Commissioner Lissner. How do you fasten them from the inside 
on the cover ? 

Mr. Nellis. The boards of the cover would be fastened together 
in that way before the cover was put on. These corrugated fasteners 
can be driven by machinery or by hand very easily. They do not go 
through the board. On an inch board, if a fastener perhaps three- 
fourths of an inch wide or thirteen-sixteenths of an inch should be 
used, it would not show on the outside. 

Commissioner Lissner. All that would do would prevent taking off 
one board; it would not prevent taking off the whole cover, would it? 


234 THEFT ; ETC.; OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Nellis. That would be possible, for them to take off the whole 
cover. To avoid that you would have to have some sealing methods 
at the corners and at the edges. There is a method of driving down 
an atiger hole and putting in a screw. 

Commissioner Lissner. Could you not use these corrugated strips 
to fasten on the cover from the outside ? 

Mr. Nellis. I do not exactly get your idea. These little things 
are only, roughly, about an inch long, perhaps, and they are made 
in widths for different thicknesses of lumber. In fastening on the 
cover, to put something on the outside of the box, I should recom¬ 
mend strapping. 

Commissioner Lissner. You could fasten the cover to the box with 
these same corrugated strips, could you not ? 

Mr. Nellis. No; I do not think we could. 

Mr. Burchmore. They will not work on an angle; that is the 
trouble. They have to work on a flat surface ? 

Mr. Nellis. Yes. 

Mr. Burchmore. You could not put them over the edge? 

Mr. Nellis. No. Is that what you meant? 

Commissioner Lissner. There is a flat surface between the edge 
of the cover and the side of the box. 

Mr. Nellis. That could be. done; but then you would have the 
corrugated fastener going into the end grain of the board and it 
would not hold very well there. 

Mr. Kirkpatrick. How much additional expense would be in¬ 
volved in using that kind of a fastener ? 

Mr. Nellis. These corrugated fasteners might add a couple of 
cents to a box, depending on the size of the box. 

Mr. Kirkpatrick. That is Avhat you call theft indicative? 

Mr. Nellis. That is what we call theft indicative; yes. 

Mr. Kirkpatrick. Because it is impossible to put that back into 
the same condition? 

Mr. Nellis. If a thief knocked out a board there it would indicate 
the board had been taken out. Possibly he could drive it out by using 
considerable force or leverage to tear away those fasteners. 

Mr. Edmonds. Could you make a large-size box in that manner? 

Mr. Nellis. There would be limitations. If you were making a 
box for a very large dynamo I do not know that it would work. 
They are not made for very heavy lumber—I mean lumber over an 
inch thick or an inch and a half, or something like that. When I 
speak of a box I mean a box from a pill box to a piano box. 

Mr. Edmonds. A piano box is a fairly good size, but from what I 
have heard to-day I do not think these longshoremen and people who 
handle freight would hesitate to carry away a piano box. It seems 
to me they would take pretty nearly anything in sight. I thought 
we might manage to get a box as big as the hold and save the freight; 
but just at the present time I am rather suspicious they would take 
the ship if we did not have the captain on it to watch it. In fact, I 
think they did steal a Shipping Board vessel over in the Mediter¬ 
ranean for a while and ran around with it on a joy ride. 

Commissioner Lissner. You spoke of other methods that might be 
devised to indicate theft, did you not? 

Mr. Nellis. Yes. You can make a double box, one box inside an¬ 
other, with the inside end at right angles to the outside end, and so 


THEFT ; ETC V OF EXPORT AND IMPORT SHIPMENTS. 235 

on with the other parts, and nail those all together with clinch nails. 
Or you can go further and put some chicken wire, or very heavy wire, 
between those two boxes; or put a wire, light or heavy, between two 
ordinary boxes. 

Commissioner Lissner. You represent the box manufacturers gen¬ 
erally, do you not? 

Mr. Nellis. Yes. 

Commissioner Lissner. And you suggested some studies might be 
made of this subject of theft indication, especially? 

Mr. Nellis. No; I was not so much inclined to suggest studies that 
might be made as that we have so much data on domestic construction 
that I think we could fall back on that to suggest better designs for 
export boxes: because while the hazards in exporting are certainly 
more strenuous than in domestic transportation, they are not entirely 
dissimilar. It is simply a case of more hazard calling for a better 
construction. 

Commissioner Lissner. Could you not, for the benefit of this record 
and of this committee, furnish a written statement concerning these 
methods of theft prevention and possibly others that you have not 
referred to, and any other practical suggestions in regard to the con¬ 
struction of boxes for the export trade ? Could you not prepare some¬ 
thing of that sort and file it with the committee? 

Mr. Nellis. I would be glad to prepare something on theft indica¬ 
tion : but I would hesitate to say very much on export-box construc¬ 
tion. because we have not studied that very much. 

Mr. Edmonds. You could, through your numerous concerns, cer¬ 
tainly suggest a safe package for carrying export goods, ordinary 
merchandise, could you not? 

Mr. Nellis. I would hesitate to do that, because it is something 
that should be done for each particular commodity. 

Mr. Edmonds. I am speaking of the ordinary merchandise. You 
have been here listening to-day; you know the great trouble has been 
with stuff like hosiery, gloves, ready-made clothing—things that a 
man can use—hats and shoes. Now, all of these commodities would 
take about the same kind of package, wouldn’t they? 

Mr. Nellis. Roughly, yes. 

Mr. Edmonds. Why could you not at least, for that kind of com¬ 
modities, get your people to get to work and suggest some kind of a 
strong and light package that would be perfectly safe? Surely, the 
ability of the box manufacturers of this country would not be taxed 
to be able to tell of at least some sort of package that can be used for 
export business ? 

Mr. Nellis. It would not; no. 

Mr. Edmonds. Particularly for merchandise of that kind. Of 
course, we would not expect you to talk about packages for carry¬ 
ing soda ash and chemicals, unless they were the finer chemicals car¬ 
ried in cases. But for these things like hosiery, gloves, the things 
these men steal, I should think you would be able to do very well 
and it might be very profitable for you to do it. 

Mr. Nellis. I can do that. 

Mr. Edmonds. We would like to have it within a short time, but 
that is not material. The big thing is to submit that matter to 
the shippers and to the Shipping Board and see whether we can 


236 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


not suggest to the people of the country something better than we 
have to-day. It is very evident that what we have to-day is abso¬ 
lutely useless to attempt to save anything if a man wants to get at 
it. So think it over. 

Mr. Nellis. I will do the best I can. 

Mr. Edmonds. And supply it to the committee, and we will supply 
it to the Shipping Board, and it may be the means of your getting 
a lot of good business and at the same time help to solve this matter 
of losing goods. 

Mr. Nellis. I will do the best I can. 

Mr. Edmonds. Surely there can be a box made that will be fairly 
proof against some ignorant workman taking stuff out. 

Mr. Nellis. It might not be proof against that fellow who was 
skillful, but I believe we could make it to show it was tampered 


with. 

Mr. Edmonds. If you could show it was tampered with when the 
captain on the boat received it, he would know it had been done on 
the lighter; if it showed it had been tampered with when the lighter 
received it. you would know it had been done on the wharf; if it 
showed it had been tampered with when the man on the wharf re¬ 
ceived it. you would know it had been done on the railroad, lou 
could follow that package all the way through if you had a package 
of that kind, and they always tell me the ingenuity of the American 
mind is so great that we can always find a solution for anything,, 
and surely the box manufacturers are not more dumb than the rest. 

Mr. Nellis. Possibly not; not dumber than the average anyway- 

Mr. Edmonds. Then let us see what you have. It might be you 
will have a very helpful solution. 

Mr. Nellis. I will be glad to do what I can. 

Mr. Edmonds. Mr. Imlay, you may proceed. 


STATEMENT OF ME. WILLIAM IMLAY, GENERAL CLAIM AGENT 
NEW YORK & CUBAN MAIL STEAMSHIP LINE. 

Mr. Imlay. I am general claim agent of the New York & Cuban 
Mail Steamship Line, better known as the Ward Line, New YY>rk 
City. 

I think, Mr. Chairman, that a great deal of energy is being spent 
in trying to cure or care for a condition which no longer exists.. 
The testimony that has been given, if my understanding is correct, 
has been largely to the effect that the complaints have surrounded 
shipping which moved subsequent to 1915 and prior to the present 
year. There has not been anything said substantially about the 
losses being heavy during 1921. 

It is common knowledge that as a result of the war there was a 
breaking down of morale, and in consequence business generally 
suffered. The underwriters’ representatives have testified to the 
extent that they suffered, and in an endeavor to show that they were 
not alone in that respect I would like to read into the record the 
following figures: 

In 1914 the Ward Line paid $75,193.09 for cargo claims. That 
is for losses due to pilferage, theft, damage, and breakage. In that 
year we carried 747,129 tons of cargo, making the losses per ton 
cargo 0.106 per cent. 


THEFT, ETC., OF EXPORT AXD IMPORT SHIPMENTS. 


237 


In 1915_we paid cargo claims to the extent of $67,468.80. We 
carried 847,574 tons of cargo. The claims per ton cargo were 0.080 
per cent. 

In 1916 we paid $173,590.72. We carried 1,216,145 tons of cargo. 
The cost per ton cargo was 0.142 per cent per ton. 

In 1917 we paid $218,700.10 and carried 1,235,853 tons. The 
claims paid per ton cargo were 0.176 per cent. 

In 1918 we paid $359,402.84. We carried 1,745,631 tons and we 
paid 0.206 per cent per ton cargo for claims. 

In 1919 Ave paid $345,653.18 and carried 1,801,583 tons, costing 
us 0.191 per cent per ton. 

The figures for 1920 are not available. We are paying some 
claims for cargo moving during that period, but it is *altogether 
possible that the amounts for claims paid may equal those of 1919. 
It gives me pleasure, hoAveA 7 er, to say that the peak has sometime 
since been passed, and it is my opinion that preAvar conditions will 
soon again obtain. While I can give no figures to support this 
statement, inasmuch as each of our foreign agents are iioav showing 
in the cargo-out reports but feAv items to Which exception could 
be taken, the only inference to be drawn is that the cargo is being 
property and safely handled and delivered at destination. 

It should be borne in mind that pilferage can not be entirely 
stopped, but if the American shippers will use packages similar 
to those used by the French. British, and German exporters the 
losses in their shipments will be surprisingly small. 

To bring out the difference I might relate that a few months ago, 
while in the port of Yera Cruz, Mex., I saw lying on the custom-, 
house Avharf a shipment of tin plate of American manufacture. 
Many of the cases Avere broken and the contents exposed to the 
elements and they had badly rusted. At the same wharf a British 
steamer was being discharged and I noticed part of the cargo con¬ 
sisted of tin plate, also cased.. This cargo was, howeA^er, being 
landed in apparently good condition, the reason being that while 
the packages were basicly the same as though shipped from the 
United States, additional care had been exercised by the shipper, 
to the extent that each case was strengthened with two cleats, and 
the cleats themselves were iron strapped. In this connection it 
may be important to say that it has been our experience that a large 
proportion of the alleged pilferages are occasioned by packages 
being insufficiently strong for the use to which they are put. 

A great deal has been said about the bill of lading exempting the 
carrier from all liability, and in that connection may I be permitted 
to say that the company vchich I represent has never, to my knowl¬ 
edge," attempted to sidestep its responsibility, and this I belieA^e to 
be also true of the other older companies, and each of our foreign 
agents has been carefully instructed to immediately invite claims 
from consignees and make payments for any and all losses for 
which the steamer is liable. The liability is largely determined by 
whether the loss Avas occasioned by a condition within the control 
of the company. 

The shipper, too, can give further assistance in the care of his 
property by not having their name, trade-marks, or other insignia 
on their packages, by "changing from time to time their shipping 
marks, and by the use of reputable trucking concerns; by deliv- 


238 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


ering their shipments to the truckmen at an early hour in the day, 
to insure delivery to the steamship pier the same day, there being 
cases recorded where the truckman receiving goods in the after¬ 
noon made no attempt to make delivery the same day, but kept 
the packages on their trucks over night and made delivery the 
following morning, and while the packages themselves were in ap¬ 
parent good condition, due to an accident in handling or to some 
other unusual condition it would be determined that the packages 
no longer contained the goods declared by the shipper, but rubbish, 
such as paving stones or other material unobtainable on a steam¬ 
ship pier. 

When packages too light in construction for ocean transporta¬ 
tion become broken in ordinary handling it is a great temptation for 
those engaged in the physical handling of the cargo to help them¬ 
selves. if they feel they can do so without being detected; and while 
we are cognizant of a basic cause and our bills of lading protect us 
from insufficiency of package, we voluntarily assume responsibility 
and pay for any loss which might subsequently be found to exist. 

Mr. Rush referred to my company having placed officers to watch 
cargo at outports; also that they were informed that if they did not 
cease a strike would be called. I wish to state that it has always 
been the practice of the Ward Line to require its officers of various 
grades to watch cargoes during the loading and discharging opera¬ 
tions at outports. We carry a considerable quantity of high-class 
cargo. Some of the shippers realize that it is of such a high class 
that it would place the property subject to unusual temptation if 
the cargo was handled as general cargo is usually handled; there¬ 
fore they place on their shipping receipts the value, intending also 
to place on their bills of lading the value, and purchasing what is 
sometimes called an insured bill of lading—in other words, asking 
the carrier for an additional sum to relieve itself of the liability. 
We are always glad to do that, because in the ships which my com¬ 
pany own we have built what we call special cargo lockers in the 
holds of the vessels, which will hold a substantial quantity of this 
high-class cargo. The special cargo, as we call it, when it is received 
is taken to a portion of our piers which is set aside for the handling 
of the more valuable property; special watchmen are designated to 
stand guard both night and day; and special receipts are issued. At 
every handling a check of the property is made, and when it is 
placed on board the steamer what is known to us as a soecial cargo 
sheet is prepared and our pursers, our chief officers—and sometimes 
both—are required to sign for that cargo, and they are also required 
to see that it is properly stowed in the locker built for that purpose. 

The cargo, when the vessel arrives at destination, is checked out 
under the supervision of the chief officer or purser, and they obtain 
a receipt, a special receipt, from the customhouse representative or 
the Ward Line representative who receives the cargo. 

While the property is on the steamer there are special locks put on 
that locker, and the keys remain in the custody of the chief officer 
while the vessel is at sea. We have had very few losses in that class 
of cargo. 

Mr. Edmonds. You have had some, have you not? 

Mr. Imlay. Yes, indeed. But bear in mind that there is a break 
m the continuity, Mr. Chairman. We are not permitted, due to the 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 239 

nature of our business, to deliver a cargo directly to the consignees. 
AY e make ail deliveries to the customhouse in Latin America. From 
some of the customhouses we obtain receipts; from others we do not. 
AYe have to rely upon our own records; and while in Mexico it is the 
law that the customhouse officials will check the cargo received and 
will give receipts for it. as a matter of fact it is never done. The 
Mexican officials, without exception, take our records as being abso¬ 
lute—that is, at some ports. At one port in particular—Tampico—the 
customs officials do check the cargo. 

Mr. Edmonds. Do they check the cargo by the package or by the 
contents of the package ? 

Mr. Imlay. By the package. Xow, due to conditions over which 
we have no control, over which the consignees in a large measure 
have no control—although some of the favored few seem to get 
around this condition—the property remains in the custody of the 
customs for several days, and in some instances for several weeks, 
before the packages are opened for appraisal; and when there has 
been an unusual delay—or, I might say, a usual delay—not infre¬ 
quently they find that some of the cases have been opened and some 
of the goods have been stolen. 

It might be well to mention that there are innumerable cases where 
the customhouse employees, the customhouse watchmen, and others 
having access to the customs warehouses have been caught leaving the 
customhouses with property abstracted from cargo cases. 

Mr. Edmonds. What happens in those cases ? 

Mr. Imlay. They have been arrested and held in communicaclo— 
in Mexico they usually hold a man in communicado for three days, 
but sometimes a friend will wire to Mexico City, and if a man is 
arrested in the morning the commandant would receive instructions 
that afternoon to set him free, and the following day he would be 
back in the customhouse. That and other conditions make it im¬ 
possible for the carrier to safeguard the property up to and until 
the consignee receives his goods. 

It was mentioned here this morning that in the case of hosiery it 
would be impractical to check each package of hosiery in a case, and 
it would only be fair to permit the wholesaler to take delivery at the 
port of destination, to sell the goods if necessary, deliver them to 
the retailer, and when he is putting the packages in the shelves if 
he finds that he is some short, according to the invoice, to make claim 
upon the carrier. I think myself that is a little bit far-fetched. 

It has also been said that to a large extent—or to a great degree— 
the owner of the goods has no record of what transpires so far as 
the goods are en route; that the only record which is kept is kept 
by the steamship companies, and they are—I do not want to be 
quoted as quoting some one else in this, but if my memory serves me 
right it was to the effect that they are reluctant to expose those 
records. I do not think that the Ward Line has wings sprouting 
out anywhere, but I want to say that it has always been the prac¬ 
tice of the Ward Line to assist the shippers or consignees whenever 
ir, has been possible to do so. There has never been, to my personal 
knowledge, an application made by anyone interested in cargo moving 
over our line who has applied to us for the facts regarding the move¬ 
ment of the cargo but what we have given them our fullest assist¬ 
ance. In many instances, where the case has been a shipment destined 


240 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

to New York, I personally have gone to our delivery department and 
permitted the receivers to inspect the receipts which their truckmen 
had given for the property. We have gone even further than that. 
We have gone into the records and have shown the conditions sur¬ 
rounding the discharge of the property from the steamer prior to 
delivery to the consignee’s representative. Our reason for doing that 
is that while, if there is one class of man in whom I prefer to place 
my destiny than another, I think it is the truckman—because the 
truckman—that is the professional truckman—is the most careful 
man I know. Before taking a package from a steamship wharf he 
takes all the care possible to see that that package is in good order 
and places proper exception on the receipt which he finds. 

Mr. Edmonds. This is the truckman that brings the goods to your 
pier in New York? 

Mr. Imlay. No; taking them away from the pier. 

Mr. Edmonds. From the pier at the point of destination ? 

Mr. Campbell. At New York ? 

Mr. Imlay. At New York; yes. In many instances we have found 
that while they exercise diligence and care in scrutinizing the pack¬ 
age very carefully when they take delivery, they sometimes make de¬ 
livery with great haste and put their coat over a crack or a nail hole 
or some other defect in a package which they may be delivering. 

Mr. Edmonds. Are your truckmen bonded ? 

Mr. Imlay. We have no truckmen. 

Mr. Edmonds. Are the truckmen that are delivering—don’t you 
have railroad truckmen delivering to you in New York? 

Mr. Imlay. No, sir; the deliveries that are made by the railroads 
to our line are lighter deliveries. 

Mr. Emonds. Is that true of the New York Central ? 

Mr. Imlay. When the cargo is in any quantity; yes. 

Mr. Edmonds. Was there not a time there that a considerable por¬ 
tion of the cargo was delivered in trucks ? 

Mr. Imlay. A goodly portion of the cargo—the higher valued 
cargo—is trucked now. 

Mr. Edmonds. Are those truckmen bonded? 

Mr. Imlay. I would not want to reply to that. 

Mr. Edmonds. The railroad really makes this delivery to your pier ? 

Mr. Imlay. In some instances, where they deliver by lighter; yes. 

Mr. Edmonds. How about the trucking? 

Mr. Imlay. When trucks make delivery of cargo having its origin 
in an interior point, the forwarding and delivery is usually made 
by a freight-forwarding agent who delivers his railroad bill of lading 
and order to a truckman and ask him to go for the goods. 

Mr. Edmonds. Your first investigation of that truckload of goods 
then comes when it arrives at your pier ? 

Mr. Imlay. Yes. 

Mr. Edmonds. Then you look for any damage that may be about 
the package? 

Mr. Imlay. Yes, sir. One of the contributing causes to pilferages 
and the tremendous losses during the period before mentioned was, 
as you know, due to the inability of the merchants to take prompt 
delivery of their goods in Cuba and in Mexico. You mentioned/1 
believe, a few minutes ago that you had a great deal of information 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 241 

on that subject. I may mention in that connection that other ports 
*with which our vessels trade in the island of Cuba were suffering from 
.similar conditions. That was also true of the principal poits on the 
Gulf coast of Mexico. 

Mr. Edmonds. That situation has been cleared up now, though, 
pretty well, hasn’t it ? 

Mr. Imlay. In Cuba, yes; almost entirely so. 

In Mexico it is being gradually relieved. 

Mr. Campbell. While you are on that subject, will you not tell the 
'Condition that existed in the port of Habana ? Let us have the details 
of what the facts were down there. 

Mr. Imlay. In January, 1919, I had occasion to visit Habana, and 
I made inquiries as to the number of ships that were in the harbor at 
that time, because they were anchored so close together that in swing¬ 
ing a great many of them struck the lighters. I was informed that 
there were ninety odd, the majority of which were not being dis¬ 
charged, as there was a strike on, and there were no facilities for 
handling the cargo. That was in the month of January, and I was 
reliably informed that a great deal of cargo which had been dis¬ 
charged from the vessels as far back as October, 1918, still remained 
on lighters. These lighters were owned by various interests. It was 
necessary for some steamers to discharge their cargoes entirely into 
the lighters, and they had no further control over the goods, notwith¬ 
standing it has been said here that the carrier should assume responsi¬ 
bility up to the time that the goods reached the consignee. 

Mr. Campbell. What was the condition of the customhouses ? 

Mr. Imlay. The customhouses and wharves were so badly jammed, 
so badly congested, that not a ton of freight at that time could be 
landed. There are hundreds of thousands of dollars worth of cargo 
which has not been accepted by the consignees for some reason or 
another that is now stored in a cemetery outside of the city of Habana. 
This cemetery is called a “ warehouse.” It is exposed to all the ele¬ 
ments, and a great deal of it will suffer beyond repair. 

Mr. Edmonds. Have you not your own piers in Habana ? 

Mr. Imlay. We have our own terminals; yes. 

Mr. Edmonds. Couldn’t you lighter from your ship to your own 
piers, or were you congested on your own piers at the same time ? 

Mr. Imlay. The entire harbor was congested. Our lighters were 
also full of cargo. We were, perhaps, more fortunate than some of the 
other steamship companies, because as far as possible our lighters were 
tied up at our terminal, and the property could be partially protected. 

Mr. Edmonds. Could you not put the material on your terminal ? 

Mr. Imlay. Our terminal was as badly congested as a great many 
of the other wharves. 

Mr. Edmonds. You coud not move the material there ? 

Mr. Imlay. We could not move it. I might mention that while I 
was in Habana a year ago last January the Government attempted to 
relieve this congestion by using convicts from the prisons, soldiers, 
and strike breakers. There was one gentleman who had a great many 
thousands of dollars worth of potatoes which originated in the North, 
were brought down there and placed on lighters and on a pier, that 
were covered up with other cargo, and by using some means—I don’t 
know what—he was able to get the Government to use the soldiers and 

60683—21-16 


242 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


convicts to uncover the potatoes, but unfortunately it was too late; the 
potatoes were substantially all spoiled and had to be taken out to sea 
and dumped. 

Mr. Edmonds. The convicts were not used generally along the piers y 
though, were they ? 

Mr. Imlay. They were used all along the water front. 

Mr. Edmonds. Eor guarding the property? 

Mr. Imlay. For guarding property. The soldiers were doing the 
work. 

Mr. Edmonds. The soldiers were guarding the property and the 
convicts were guarding the soldiers? [Laughter.] 

Mr. Campbell. Did your company or did the steamship companies 
have any control over that condition or that situation? 

Mr. Imlay. Xone whatever. 

Mr. Edmonds. That condition in Habana continued pretty well all. 
through the year 1920, did it not? 

Mr. Imlay. It started early in the fall of 1918 and was cleared up 
about the first of this present year. 

Mr. Edmonds. Did you continue to accept freight for Habana right 
along? 

Mr. Imlay. In limited quantities. 

Mr. Edmonds. You did try to discourage shippers from sending- 
down there to that point unless it was absolutely necessary? 

Mr. Imlay. A great many of the companies restrained— I say a 
great many: some of the companies—refrained from accepting any 
cargoes for Habana, but there was such a great demand for goods of 
various kinds in Cuba that many of the shippers whom we had been 
serving for years made representations to us that it was necessary to' 
take their property to Habana, and we did so, but with great reluc¬ 
tance, knowing that our ships would be held up indefinitely. 

On our passenger ships we for a time would accept not more than 
1,000 tons of cargo. The ships will carry between 8,000 and 5,000' 
tons, depending upon the vessel. 

Mr. Edmonds. During or since the war you have been allocated 
Shipping Board vessels in that trade, have you not? 

Mr. Imlay. Some; yes. 

Mr. Edmonds. Do you find the loss in those vessels is greater—are 
these allocated vessels, or do you supply the crews to those vessels,, 
or does the Shipping Board do that? 

Mr. Imlay. We have had ships both ways. We have put the men 
on board; other ships we have had from the Shipping Board allocated 
to us with the crews supplied. 

Mr. Edmonds. Is there any difference in the losses sustained on 
the Shipping Board vessels compared to your own regularly run. line- 
vessels ? 

Mr. Imlay. I am not prepared to answer that. 

Mr. Loines. Is it not true, Mr. Imlay, that a good many of those 
Shipping Board vessels that were assigned to you were not suitable 
for the carriage of general cargo? 

Mr. Imlay. Many of them. That too, was the condition which 
made for most unsatisfactory results. Some of these vessels which 
were allocated to us were placed in trades where it was necessary for 
us to make four or five, possibly more, ports. It is, as a practical 
proposition, impractical to stow general cargo so that it can be 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 243 


discharged satisfactorily in that number of ports from what is called 
a “ single-deck ” ship. 

Mr. Edmonds. The reason I asked the question as to the compari¬ 
son with Shipping Board ships was that I would like to know 
whether a regularly organized line of steamers with their regular 
crews was able in any way to reduce the amount of loss. In other 
words, will we by experience in time have crews and captains who 
understand their business sufficiently to prevent this loss? 

Mr. Imlay. Under the present conditions, Mr. Chairman, I would 
say that it is my personal opinion—this is unofficial—that we should 
place officers, masters, and crews on board a limited number of ships 
and operate those successfully in the trades in which we are engaged. 
That is my impression. 

Mr. Edmonds. Well, I was just trying to find out whether even¬ 
tually or in time, as we get these men that are experienced on the 
ships, these losses could be stopped. I think one of the greatest 
troubles to-day is the fact that some of our new officers do not under¬ 
stand how to carry out their duties. 

Mr. Imlay. One condition that makes for the improvement gen¬ 
erally is our ability to get back a great many of the men that were 
with us for many years. That is true in the several capacities in 
which these men are engaged, masters, deck officers, tally men, steve¬ 
dores, etc. 

Mr. Edmonds. What makes you think that the amount of loss is 
being rapidly decreased to-day—the loss we are talking about ? 

Mr. Imlay. I mentioned that, I believe, in my memoranda by say¬ 
ing that the reports which we are receiving from our outport agents, 
our foreign agents—each of our agents is required to send in 
promptly an over and short damaged cargo report—which indi¬ 
cates the condition of the cargo discharged from a vessel at his port. 

Mr. Edmonds. The reduction in loss is partially attributable to 
these experienced men getting back again, I suppose? 

Mr. Imlay. It is due to the general betterment of conditions. 

Mr. Edmonds. Does that come about naturally, or have you taken 
any particular pains to bring it about? 

Mr. Imlay. We are spending a great deal of money— I am sorry 
for the moment that I am unable to give you the figures—in protect¬ 
ing the property that is intrusted to our care. That money is not 
only spent in watching cargo in New York but also in the extra 
compensation which we pay our officers on board the ships, quarter¬ 
masters, wireless operators, etc., to watch the cargo in conjunction 
with the watchmen whom our agents employ for that purpose. 

Mr. Edmonds. This better condition that you speak of is not re¬ 
flected. according to the testimony given us on Monday by the in¬ 
surance people, in the insurance rates. Is it the custom for insurance 
rates only to reflect a condition like this at some later date ? 

Mr. Imlay. That has been my experience. 

Mr. Edmonds. That is, their returns will show then that they can 
reduce the rates as the better conditions exist? 

Mr. Imlay. That is true. 

Mr. Edmonds. Just at the present they are reflecting, possibly, the 
rates of two or three months ago—the losses of two or three months 
ago? 


244 THEFT, ET'C V OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Imlay. I would say the losses obtaining in a period even fur¬ 
ther back than two or three months ago. 

Mr. Edmonds. As this condition of affairs improves the rates will 
naturally improve along with it? 

Mr. Imlay. That is my expectation. 

Mr. Campbell. May I finish with our part of this before you go 
into cross-examination? 

Mr. Edmonds. Very well. It is not cross-examination, however, 
but simply asking questions. 

Mr. Campbell. We have so designated it in the past. What I 
mean is this, Mr. Edmonds: There are many phases of the subject 
that he has not covered yet, that I want him to cover. 

Mr. Edmonds. Very well, let him cover them fully while we are 
at it. 

Mr. Kirkpatrick. I do not want to terminate the examination, but 
this is right in line with what you have said. You said you were 
spending a great deal of money to protect your shipments. Does 
that refer to these special shipments that you were speaking of, 
or generally? 

Mr. Imlay. Generally. 

Mr. Kirkpatrick. Now, may I ask you this: Plow much does the 
general run of freight that you have get the benefit of the special pre¬ 
cautions which you describe, which you take with regard to this 
special kind of freight? 

Mr. Imlay We have what we call a “ special cargo list.” 

Mr. Kirkpatrick. Yes, you explained that. But how much of 
those precautions benefit the bulk of the freight that you get? For 
instance, you have special watchmen for that class of freight; are 
those watchmen in a position to take care of the bulk freight, too? 

* Mr. Imlay. No. 

Mr. Kirkpatrick. Why not? 

Mr. Imlay. Those men are engaged for that specific purpose. 

Mr. Kirkpatrick. But why not? Are they not on the same 
wharves ? 

Mr. Imlay. Yes; but the wharves have quite a large area. If I 
may continue, we have what we call a “ special cargo list ” in which 
is enumerated various classes of commodities which are of more 
or less valuable nature, and even though a shipper may not declare 
the value of the goods on his shipping receipt, we give these higher- 
valued packages better attention than the low-valued packages. 

Mr. Kirkpatrick. I did not mean to go over that. I was only 
wondering how far the bulk of the cargo got the benefit of that care 
that you took of the special cargo. 

Mr. Loines. You carefully watch all of your general cargo, do 
you not? Tou have a staff of watchmen on your pier? 

Mr. Imlay. We have a very large staff of watchmen, and we watch 
the cargo as carefully as it is possible to do. 

Mr. Kush. This special arrangement for the care of extra valuable 
cargo, does that apply to inward and outward bound cargo, or only 
to inward, to the United States? 

Mr. Imlay. To outward principally. The bulk of the cargo that 
we bring into the United States is raw material, and we have but 
very little use, I may say—a limited use—for the special cargo 
compartments on the northbound freight. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 245 

Mr. Rush. Do you find that the taking of those special precau¬ 
tions does, as a matter of fact, reduce the loss at all? 

Mr. Imlay. Oh, yes. 

Mr. Rush. It does ? 

Mr. Imlay. Yes, sir. 

Mr. Rush. That is all I wanted to ask. 

Mr. Campbell. Going back to your South American situation, 
■where, physically, does the control which the ship is able to exercise 
over the delivery of the cargo cease ? 

Mr. Imlay. At the time of release of the cargo from the ship’s 
tackle. 

Mr. Campbell. To what ports do your ships ply? 

Mr. Imlay. Principally to Cuban and Mexican ports. 

Mr. Campbell. In the Cuban ports are you able to discharge on 
wharves or are you compelled to lighter ? 

Mr. Imlay. In most of the Cuban ports to-day it is possible for 
us to make delivery directly to the wharves. 

Mr. Campbell. What sort of labor do you employ down there for 
stevedoring ? 

Mr. Imlay. Native labor. 

Mr. Campbell. Spanish labor? 

Mr. Imlay. Cubans in Cuba and Mexicans in Mexico. 

Mr. Campbell. Are there any white laborers to be employed? 

Mr. Imlay. In a limited number. 

Mr. Campbell. Where does the cargo go when it leaves the ship’s 
tackle on the wharf ? 

Mr. Imlay. Directly into the custody of the customs officials. 

Mr. Campbell. Where do the customs officials take custody of the 
cargo ? 

Mr. Imlay. At the time of release of the cargo from the ship’s 
tackle. I may add to that should a package be broken in dis¬ 
charge, the carrier is sometimes prevented by the customs officials 
from touching it. In other instances we are permitted to have our 
coopers place it back in good condition. In many instances, both in 
Cuba and in Mexico, we are prevented from touching the cargo once 
it leaves the ship’s tackle. 

Mr. Campbell. Once it leaves the ship’s tackle, are you able to 
exercise any physical control over it whatsoever ? 

Mr. Imlay. In Habana now; yes. 

Mr. Campbell. To what extent? 

Mr. Imlay. We have our own terminals there, and we act—our 
agent at that point acts under the jurisdiction of the collector of cus¬ 
toms in the stowage and custody of the cargo in our own warehouse, 
in the customhouse, or bonded warehouse. 

Mr. Campbell. Outside of the port of Habana, are you able in 
any of the other ports to exercise any physical control over the cargo 
after it leaves ship’s tackle ? 

Mr. Imlay. With the exception of Santiago, Cuba; no. 

Mr. Campbell. Does the same condition at Santiago prevail as at 
Habana ? 

Mr. Imlay. In a limited manner; yes. 

Mr. Campbell. What is there that the steamship company could do- 
to assure against theft or pilferage after the cargo leaves ship’s tackle 
at those outports that you do not do now ? 


246 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Imlay. Nothing that I know of. 

Mr. Campbell. Coming back to the receipt of cargo here, I would 
like to have you explain to the committee the physical process of 
your receiving cargo. What is done with it when it comes in on the 
truck; who unloads it; where is it stored; what watch is given to it ? 
I want the whole process until it is placed in the ship traced. 

Mr. Edmonds. This is in New York? 

Mr. Campbell. In New York; yes. That is, ordinary cargo; leave 
aside this high-grade cargo. 

Mr. Imlay. Ordinarily, when truck freight is being delivered, 
the truckman drives down onto the pier and discharges his freight 
onto the wharf. As he drives down the pier a check clerk is tolled 
off by the foreman as tally clerk to record the cargo which is dis¬ 
charged by this truckman. He takes the receipt which the truckman 
has in triplicate, and as each package is discharged from the truck 
he measures it, compares the marking with the marks as they appear 
on the shipping receipts, and the property is then either placed 
directly into the steamer or is placed at a point designated bv the 
stevedore, pending its removal into the ship. 

There are on our piers certain stations—by that I mean the piers 
are divided off—and in each division a watchman or more, if neces¬ 
sary, is employed to fully protect all property in that section. 

On the steamers we have one watchman in each of the cargo com¬ 
partments where cargo is being stowed, and another watchman on the 
deck to supervise the situation generally and to relieve any of the 
watchmen below in the event it is necessary for them to leave their 
station. 

Mr. Edmonds. Are they engaged in counting the cargo or do they 
watch it only? 

Mr. Imlay. They are engaged in watching the cargo only. As a 
matter of fact, they watch the men who are handling the cargo. 
They know that the cargo will look out for itself if they can watch 
the men who are handling it. 

In addition to these watchmen, on each steamer we have a rounds¬ 
man and on each pier we have a lieutenant. All the officers from 
roundsman up to the inspector in charge are professional policemen, 
men who have been policemen in the Metropolitan police force, and 
were retired from the service after spending the prescribed length 
of time which entitles them to retire. The man in charge of the 
police force is an inspector, an ex-inspector of police, and we feel 
that everything that is humanly possibly to be done is being done to 
protect the cargo at that end. 

Mr. Campbell. Is your warehouse, your shed, an open shed, or is it 
^one with closed doors ? 

Mr. Imlay. The piers are all covered piers and are built as most 
-steamship piers are, with sliding doors on the sides. 

Mr. Campbell. Are those left open? 

Mr. Imlay. They are all kept closed, except when cargo is being 
passed to or from a ship or a lighter alongside. 

Mr. Edmonds. Do you use your own employees to load? 

Mr. Imlay. Entirely so. 

Mr. Edmonds. Or do you contract with stevedores? 

Mr. Imlay. No, sir; we use our own employees. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 247 

Mr. Edmonds. Is that true of the cars that come alongside, the 
lighter cars? Do you use your own men there? 

Mr. Imlay. Altogether. 

Mr. Edmonds. They are all your own employees? 

Mr. Imlay. Yes, sir. 

Mr. Edmonds. Now, the material that is brought to your pier by 
wagon, you have nothing to do with that? You simply"get it at the 
pier and receipt for it there ? 

Mr. Imlay. We receive all our cargo at our piers. 

Mr. Edmonds. You do not send any wagons out to collect it, or any¬ 
thing like that? 

Mr. Imlay. The company as a steamship company does not. We 
have, for the convenience of the shippers, a freight-forwarding de¬ 
partment which, to facilitate the handling of shipments having their 
origin in an interior point, looks after the movement from railroad to 
pier in the manner followed by the outside steamship forwarding 
agents. 

Mr. Edmonds. Your interest in that line as a'forwarding line does 
not prevent you from taking the wagon load of goods brought to 
that forwarding line and looking through it to see that it is perfectly 
well packed? 

- Mr. Imlay. These packages, or that property which is received, re¬ 
ceives identically the same treatment as if we had no concern in the 
movement other than as carriers. 

In a few other instances we lighter our own cargo. We have our 
own lighters and we sometimes make arrangements with shippers 
to go to certain points in the New York harbor or the adjacent 
waters and pick up freight in large quantities which is to move 
over our vessels. That cargo, when it arrives alongside of a vessel 
or a pier, whichever the case may be, receives 'and is accorded the 
same treatment as if it were received from our own lighters. 

Mr. Campbell. When cargo comes alongside your pier by lighter, 
what is physically done then ? 

Mr. Imlay. The cargo to be discharged onto the pier or onto the 
steamer ? 

Mr. Campbell. Supposing a lighter is brought into your ship 
with a cargo for export, whether the steamer be there or be not 
there, in both cases, what do you physically do in each case? 

Mr. Imlay. If a lighter is brought alongside of our steamer—and 
we endeavor to have all lighter freight delivered directly to the 
steamers—it is discharged—the cargo from the lighter is discharged 
immediately into the vessel. 

Mr. Edmonds. Is that checked as it goes in ? 

Mr. Imlay. Our tally clerks are sent down onto the lighter, where 
they measure and inspect each package as if it were being delivered 
by truck. 

Mr. Campbell. What receipts do you give for a cargo from a 
lighter ? 

Mr. Imlay. Substantially the same as the receipts given for truck 
freight. 

Mr. Campbell. If there is any evidence of outside damage, break¬ 
age. staining, what do you do? 

Mr. Imlay. Exceptions are placed on the receipts. 


248 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Campbell. Now, if you do not put your cargo directly on 
board the ship, and a lighter comes into your slip, what do you do 
with it then? 

Mr. Imlay. Discharge it onto the pier, where it is handled the same 
as if it were being delivered by truck. 

Mr. Campbell. Are these doors shut, closed at night? 

Mr. Imlay. Each and every night. 

Mr. Campbell. Now, what control have you—whose employees 
discharge the trucks as they come onto the dock? 

Mr. Imlay. The truckmen are presumed to discharge the freight 
onto the wharf. Sometimes we assist them. 

Mr. Kirkpatrick. That is after it has been checked? 

Mr. Imlay. No; as it is being delivered onto the wharf. 

Mr. Kirkpatrick. You check it as it is landed? 

Mr. Imlay. As it is actually landed on the property. 

Mr. Campbell. Is it physically possible or practicable for the 
steamship company to open each package as it is brought onto your 
dock, to determine whether or not it contains the alleged goods ? 

Mr. Imlay. It is a physical impossibility. 

Mr. Campbell. After the goods are loaded onto your steamers, 
how are they cared for on board the ship during the voyage? 

Mr. Imlay. The cargo compartments, as soon as the vessel is loaded,. 
or each compartment is loaded, are securely locked; the keys for the 
various hatches and compartments are placed in the custody of the 
chief officer; the hatches are removed twice each day en route—at 8 
o’clock in the morning and at 4 in the afternoon; the chief officer, 
personally, accompanied by the ship’s carpenter, goes into each 
compartment, with the exception of the special-cargo compartment, 
for the purpose of sounding the wells and taking the temperature 
of each cargo compartment. 

Commissioner Eisner. Who accompanies the officer into the com¬ 
partment ? I did not hear that. 

Mr. Imlay. He is accompanied by the ship’s carpenter. 

Mr. Campbell. During the war and since the armistice what has 
been the condition, the labor condition, with which your companies 
have been confronted as respects the labor which checks and handles 
the cargo received onto your docks and delivered from your docks— 
that is, labor on your docks that checks the cargo and does the 
physical handling? 

Mr. Imlay. Do I understand you to mean the tally clerks ? 

Mr. Campbell. Yes; the tally clerks and your stevedores during 
the war and up to the time this recent shipping depression came, 
when shipping was booming, what was the condition of the labor 
market and the character of labor that you were getting? Where 
did you go to get it ? 

Mr. Imlay. It was most unsatisfactory. 

Mr. Campbell. Why? Just explain in full detail that situation. 

Mr. Imlay. Because the markets afforded labor generally a chance 
to do pretty much as it cared to. We lost a great many of our older 
employees during the war and in the period following immediately 
after the war and were compelled to take such labor as would be 
sent us by the unions of which the men were members. 

Mr. Campbell. Why didn’t you employ nonunion labor ? 

Mr. Imlay. The conditions generally would not permit that. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


249 


Mr. Campbell. Were you able to make any personal selection of 
the union men that were sent to you ? 

Mr. Imlay. To a limited degree only. 

Mr. Campbell. Now, has there been any change in that condition? 

Mr. Imlay. The condition has greatly improved. We are picking 
and choosing to a large extent now. 

Mr. Campbell. In the days of the war and following them what 
control did you have over the selection of those who loaded the 
trucks on inward cargoes to New York? Were they your loaders 
that loaded the trucks? 

Mr. Imlay. No; we had no control over them. 

Mr. Campbell. Have you to-day ? 

Mr. Imlay. Substantially none. 

Mr. Campbell. Why? What is this condition? Explain it fully. 

Mr. Imlay. The loaders and cargo handlers for the shippers are 
men employed by the consignees and are picked up more or less care¬ 
lessly along the water front; therefore, the only control that we may 
have over the men is to prevent them from committing any depre¬ 
dation. 

Mr. Edmonds. This is not here you are talking about now? 

Mr. Imlay. Yes; in New York. 

Mr. Edmonds. You are speaking about unloading incoming cargo? 

Mr. Imlay. Yes; this is cargo that is being delivered to consignees, 
either on their lighters or on trucks, so our authority is limited to 
watching to see that no harm befalls the property in which they 
are interested. 

Mr. Edmonds. Your employees still check out, do they not? 

Mr. Imlay. Yes, sir; entirely. 

Mr. Edmonds. You still keep your checking records all the way 
through ? 

Mr. Imlay. Yes. 

Mr. Campbell. Are these records all preserved by your company? 

Mr. Imlay. For five years; yes. 

Mr. Campbell. Have you ever refused access to them to any shipper 
who applied for them ? 

Mr. Imlay. I never have. 

Mr. Campbell. Or to these carriers or their lawyers. 

Mr. Imlay. Some of the underwriters’ representatives may have 
refused. 

Mr. Campbell. Is there anything that you know of that can be 
done to more safely watch and care for the cargo, both inward and 
outward, than what your company is doing to-day? 

Mr. Imlay. Not a thing. 

Mr. Campbell. Wherein is it defective, and wherein can it be 
cured ? 

Mr. Imlay. We claim that our system is not defective in that if we 
find a condition that can be improved the improvement is immediately 
made. 

Mr. Campbell. Where are those losses occurring, then ? Where is 
the theft being made and pilferage being committed ? 

Mr. Imlay. Largely at the ports of destination. We have not the 
same control over the cargo at the out ports that we have in New 
York. In most of the Latin-American countries the men engaged 


250 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

along th,e water fronts, whether it be in the capacity of a foreman 
of stevedores, a laborer, a dock clerk, or a watchman, they are in a 
large measure related. Therefore, we can not obtain the same degree 
of efficiency in the care of the property at the foreign ports that we 
look for and obtain in New York. 

Mr. Edmonds. Let me ask two questions at this point. Mr. Imlay, 
with that system you get everything on board and you take every¬ 
thing off. Have you found at any time any class of pilferage by the 
crew ? 

Mr. Imlay. Yes; we found a number of cases. I mentioned some 
time ago, I think, Mr. Chairman, that it was physically impossible 
to stop pilfering entirely. 

Mr. Edmonds. But is it to a serious extent or is it limited to taking 
something like a couple of dozen out of a gross, or something like 
that? 

Mr. Imlay. If given the opportunity, they will steal the entire 
contents of a box and destroy the container. 

Mr. Edmonds. You have lost cases? 

Mr. Imlay. Yes;.and vre have known of pieces of boxes being 
found at the last port when the ship was being cleaned up for the 
loading of cargo that could, possibly, had they been found in their 
entirety, have been identified as the containers which originally 
contained dry goods and general merchandise. 

Mr. Edmonds. You have had trouble then with the crew and yet 
had to keep your hatches open a couple of times during the day. 
Have the crew any access to the carero ? 

Mr. Imlay. During the abnormal conditions there were instances 
where the crew had forced the locks and gotten into the cargo com¬ 
partment and pilfered the cargo, but the same conditions obtained 
with the crews which obtained with the longshoremen and tallymen 
that we employed. We had to take what was available, and what was 
available was not of a very desirable quality. 

Mr. Edmonds. Have you been able to hold down that pilferage 
by the crew now at the present time ? 

Mr. Imlay. To a large extent; yes. 

Mr. Edmonds. It still exists, though? 

Mr. Imlay. Very slightly, if at all. 

Mr. Edmonds. When you find a loss like that do you find who 
took it? 

Mr. Imlay. We have found cargo, which we believe has been 
stolen from the cargo department, in the possession of members of the 
crew, but we have never been able to obtain a conviction. Although 
we have had the men arrested, the Federal district attorneys have 
been disposed to give them the benefit of any doubt, and unless we 
could prove that the property actually came out of a given package 
we would be unable to obtain a conviction; so we have never been 
able to successfully prosecute any of these. 

Mr. Edmonds. One thing strikes me as a peculiar coincidence. I 
do not know whether there is anything in it or not. It seems as if 
this tremendous wave of pilferage and stealing that started in with 
shipping has all come about since the passage of the La Follette Act. 
Is there any lack of discipline occasioned by that act? 

Mr. Imlay. The masters say yes. The masters almost to a man 
claim they no longer have control over their crews. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 251 

Mr. Edmonds. Is this true of the old masters, not talking of the 
new masters? 

Mr. Imlay. The old shipmasters; the men who have been masters 
for many years. 

Mr. Edmonds. Men who know their business. 

Mr. Imlay. Yes. 

Mr. Edmonds. It just seems rather peculiar that after 1915-16, 
when the La Follette bill was put into force, that your losses should 
leap up. Of course the war was on at that time. It might be occa¬ 
sioned by the war. 

Mr. Imlay. It was the result of a combination of conditions. 

Commissioner Lissner. I think the witness has given plenty of 
good reasons for a change in the conditions without attributing it 
to the La Follette Act. 

Mr. Campbell. Will you tell me how many steamers your com¬ 
pany operates? 

Mr. Imlay. I believe we have 18 of our own. 

Mr. Campbell. And at the peak of your service how many of the 
Shipping Board vessels did you operate? 

Mr. Imlay. I do not want this to be accepted as authentic, but if 
m} T memory serves me right we operated some 78 Shipping Board 
vessels at one time in addition to those owned and chartered. 

Mr. Edmonds. Do you find the other ships of other nations, trav¬ 
eling in the same routes that you are in, complain in the same way 
about the customhouse situation? 

Mr. Imlay. My inquiries have resulted in satisfying me that we 
do not suffer to any greater extent than any of the other lines en¬ 
gaged in the same trade, and I am inclined to believe that we have 
less difficulty than a great many. 

Mr. Edmonds. Do you think that our present diplomatic situation 
with Mexico has anything to do with it ? 

Mr. Imlay. I would rather not pass on that. 

Mr. Campbell. If the liability of your company is increased along 
the lines demanded by our underwriting friends, is that going to cure 
the situation? 

Mr. Imlay. May I have that question again? 

Mr. Campbell. If the liability of your company is increased by 
making you responsible to a higher degree for these thefts and 
pilferages, as requested by the underwriters and shippers, is that 
in any way going to increase the care and caution which you are 
exercising now in looking after these goods? 

Mr. Imlay. It can not cause us to give the property any greater 
care than we are giving now. 

Mr. Jones. I understand that the specially cared for merchandise 
showed much less pilferage losses than ordinary. May I ask how 
much the additional charge is as compared with the original charge 
to take care of that specific increased care? 

Mr. Imlay. You mean to Cuba? 

Mr. Jones. Anywhere. Is it any general percentage? 

Mr. Imlay. No"; different routes call for different rates. We are 
charging 2J per cent now to Cuba. 

Mr. Jones. That is 2^ per cent additional? 

Mr. Imlay. Ad valorem. 

Mr. Jones. That is the regular charge? 


252 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Imlay. That is the charge we are asking now. 

Mr. Jones. That is the regular charge. Then, to make this special 
arrangement, merchandise that is especially cared for, how much do 
you ask for that? 

Mr. Imlay. I am afraid I did not answer your question properly. 
The tariff rate, it is necessary to say that I am not familiar with that. 
That is the rate. I am not familiar with that but, in addition to that, 
the charge of 2^ per cent ad valorem is to take the extra risk involved. 

Mr. Jones. The 2J per cent of the value of the merchandise or the 
full price of the merchandise? 

Mr. Imlay. Yes. 

Mr. Jones. And that apparently covers the major part of your 
pilferage situation ? 

Mr. Imlay. No ; I said that this special cargo that we were carry¬ 
ing was in a large measure safely delivered at the destination. 

Mr. Jones. That means the same thing. 

Mr. Imlay. I do not understand so. 

Mr. Jones. The pilferage losses that you discover are on the regu¬ 
lar cargo in most part? 

Mr. Imlay. Very largely. 

Mr. Jones. And there is a comparatively negligible amount on this 
special ? 

Mr. Imlay. Quite right. 

Mr. Jones. And the 2^ per cent ad valorem charge makes it possi¬ 
ble for you to take the care of the merchandise that will produce that: 
result ? 

Mr. Imlay. That is true. 

Mr. Kirkpatrick. What do you do with the outports, with the spe¬ 
cial cargoes that you speak of, that you do not do with the regular 
cargoes ? 

Mr. Imlay. At each of the ports at which our vessels call regularly 
we have our own organization. By that I mean we have our agents 
and we have our own tallymen. To the best of our ability we have our 
own watchmen and when the special cargo is about to be discharged,, 
the representative on board, whether it be the purser or one of his 
assistants or one of the deck officers goes into this special compartment 
with our chief tally clerk who checks the cargo out and makes a deliv¬ 
ery of that in a special manner to the customers, at the same time 
signing for the property in the condition as found. 

Mr. Kirkpatrick. What do you mean by a special manner ? 

Mr. Imlay. Seeing that it is delivered all at one time alongside of 
the ship that the custom officials’ attention is called to that as being 
special cargo. 

Mr. Kirkpatrick. Who is in charge of that particular operation? 

Mr. Imlay. The chief tally clerk is the one who receives it. 

Mr. Hickox. Would it not be possible for you to take another 
cargo on any one of your ships and deliver on the basis of this spe¬ 
cial cargo that you have described? 

Mr. Imlay. Would it or would it not? 

Mr. Hickox. Would it? 

Mr. Imlay. I do not believe so. 

Mr. Hickox. Have you the physical ability to do it? 

Mr. Imlay. We have not. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 253 

Mr. Laws. Mr. Imlay, with the precautions that you have taken, 
which seem to be rather good, you get pretty good results, both on 
the special cargo and on the general cargo. Is not that so with re¬ 
spect to pilferage losses? 

Mr. Imlay. Are you speaking of the present time or the past? 

Mr. Laws. The present time. 

Mr. Imlay. Yes; we get good results. 

Mr. Laws. You get good results? 

Mr. Imlay. Yes. 

Mr. Laws. Have you increased rates to shippers, in consequence of 
these precautions^ you are taking as to watchmen and checking and 
all that sort of thing, in any way? 

Mr. Imlay. Yes; quite recently we increased the ad valorem rate 
from 1 per cent to 2J per cent. 

Mr. Laws. That is, the special, high-grade stuffs 

Mr. Imlay. Yes. 

Mr. Laws. But on the ordinary cargo have you increased your 
rates any ?. 

Mr. Imlay. I am not prepared to discuss rates. That is a traffic 
proposition. 

Mr. Laws. Are you able to compete with other lines at the rates 
you are charging? Are you able to compete with other steamship 
lines ? 

Mr. Imlay. I think so. 

Mr. Laws. That is what I want to get at. So that, notwithstand¬ 
ing this extra expenditure of money involved in the extra precautions 
you take, you are still able to compete successfully with other lines? 

Mr. Imlay. I would like to say in reply to that that our competi¬ 
tors are largely American lines. 

Mr. Laws. I do not care what lines they are. I say you are able 
to compete successfully with them. 

Mr. Imlay. We feei that we are. 

Mr. Laws. Have you in your bill of lading—have you one of your 
bills of lading with you? 

Mr. Imlay. No; I have not. 

Mr. Laws. Have you in your bills of lading the ordinary exemp¬ 
tions limiting liability to $100? 

Mr. Imlay. Yes. 

Mr. Laws. And the limitations against all of these various things 
that have been detailed in other bills of lading—substantially, I 
mean? 

Mr. Imlay. Yes; but permit me to say in that connection that the 
Ward Line has never vet attempted to avail itself of any of these 
conditions if it could be determined by its own records that the loss 
had occurred as a result of negligence. 

Mr. Laws. Of its negligence—I see. So that so far as those provi¬ 
sions in your bill of lading are concerned where it was determined 
that it was the result of the Ward Line’s negligence, they are a dead 
letter ? 

Mr. Imlay. I would not say that. 

Mr. Campbell. That is argumentative ? 

Mr. Imlay. I would not say that. 

Mr. Laws. But you do not insist on them ? 


254 THEFT, ETC., OF EXPORT AXD IMPORT SHIPMENTS. 

Mr. Imlay. I think the answer I gave to the preceding question may 
take care of that. 

Mr. Laws. That is up to you. If you do not care to answer it, do not 
answer. It is entirely up to you. 

Mr. Imlay. All right. 

Mr. Laws. You do not care to answer that? 

Mr. Imlay. Not any more than I did in the preceding question. 

Mr. Laws. Do you decline any claims, Mr. Imlay, where you find 
that the losses occurred from your negligence, or the damage occurred, 
as the case might be. because notice of claims were not given in ac¬ 
cordance with the bill of lading? 

Mr. Imlay. As a practical proposition, no. There may have been 
some exceptions, 

• Mr. Laws. And that applies also to cases of nondelivery and theft 
and pilferage ? 

Mr. Imlay. I do not believe at this time I would make any distinc¬ 
tion between them. 

Mr. Laws, If that, in fact, is the practice that you have adopted, 
have you any serious objection, or has your company, to eliminating 
the amount of liability provision—the limitation of liability to $100— 
in the case of your negligence ? 

Air. Imlay. I do not. 

Mr. Campbell. That is arguing. He is here to exhibit facts. It is 
not for an executive officer to dictate the polic} 7 . 

Mr. Edmonds. I think the witness is perfectly justified to say that 
he does not wish to answer questions. This is not a judicial matter. 

Air. Laws. You do hot care to answer the question? 

Mr. Imlay. No. 

Air. Edmonds, The witness may not know or may not be able to 
answer the question. 

Air. Laws. If he says he does not know, all right. 

Air. Edmonds. I do not think it is fair to insist on the question, 
when the witness says that he is not justified in answering it. We do 
not want any witness to answer anything he does not wish to. 

Air. Laws. Exactly so, and if he says he does not care to that ends 
it so far as I am concerned. Can you tell us, Air. Imlay, what per¬ 
centages of the claims that have been presented to your company for 
loss, nondelivery, and pilferage have been paid, as compared with 
what percentage you declined to pay, if any, in the last five years— 
approximately ? 

Mr. Imlay. That is too broad a question to be ansAvered. 

Air. Laws. In the last year? In what feature is it too broad—for 
your purposes, I mean to say ? 

Air. Imlay. The term “ claim ” is too indefinite. We receive many 
claims for packages, which it is proven have been subsequently de¬ 
livered. The claims are withdrawn, and we do not keep any such 
figures. 

Mr. Laws. I mean claims that have not been withdrawn and where 
the packages have not been subsequently delivered ? 

Air. Imlay. I will answer your question in this way. To the best 
of my knowledge and belief, every just claim, every claim with 
merit, which has been presented to the Ward Line, has been paid. 

Air. Laws. That is aP 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 255 


Mr. Burchmore. 1 ou gave your figures there ? Can you make any 
figure even though it is an estimate, as between the claims that are 
for pilferage and theft, either of parts of cases or whole cases, and 
claims that are for other things, such as damaged freight, rough 
handling, or leakage, or anything of that kind? 

Mr. Imlay. I will say to that that the amounts paid for alleged 
damage claims were very small, inconsequential. 

Mr. Burchmore. What I meant was the proportion or percentage 
of the amount that was theft and pilferage? 

Mr. Imlay. I would not care to attempt to approximate. 

Mr. Burchmore. You could not even indicate whether it w’as 20 
per cent or 50 per cent, roughly ? 

Mr. Imlay. No, sir. 

Mr. Burchmore. It was a large item, however, was it? 

Mr. Imlay. Theft and pilferage? 

Mr. Burchmore. Yes. 

Mr. Imlay. Yes; I would say so. 

Mr. Burchmore. I mean the payments were large? 

Mr. Imlay. Yes. 

Mr. Burchmore. Just one other question, if you are willing to 
answer it. Do you see any reason why a steamer line such as yours 
should not assume, in its contract with the shippers, full responsi¬ 
bility, excepting for marine perils, for delivering at destination to 
the consignee or the customhouse all of the goods which it actually 
received at the point of origin? 

Mr. Imlay. Is not that substantially the same question that this 
gentleman asked? 

Mr. Campbell. It is a matter of policy. 

Mr. Burchmore. It is a very broad question of a fair kind; that 
is, what objection there is to a plain contract providing for that sort 
of thing. This gentleman can give us the practical side of it. 

Commissioner Lissner. I think the witness ought to be allowed to 
answ r er questions without interference by counsel. He is perfectly 
able to take care of himself. 

Mr. Edmonds. If this witness does not want to answer, and he tes¬ 
tifies that it is a matter of policy for the company to decide, it is 
hardly fair to ask him. 

Mr. Imlay. That is substantially the same question which this 
other gentleman asked jthat I did not answer. 

Mr. Burchmore. You prefer not to answer it? 

Mr. Imlay. Yes. 

Mr. Edmonds. I would like to ask Mr. Imlay one question. You 
are asking a 2| per cent ad valorem export rate for your special stor¬ 
age room for taking care of packages. That has nothing to do with 
insurance whatever. In other words, you accept no more responsi¬ 
bility on that package at the 2 per cent rate than you did before ? 

Mr. Imlay. We waive the limit of liability. 

Mr. Edmonds. In other words, you assume the full liability? 

Mr. Imlay. Assume the full responsibility for the goods. 

Mr. Edmonds. In other words, you virtually then insure the safe 
delivery of these goods for 2-J per cent? 

Mr. Imlay. That has been called. I believe, an insured bill of 

lading. 


256 THEFT, ETC., OF EXPOET AND IMPORT SHIPMENTS. 

Mr. Jones. I called attention to the fact in talking with our 
member concerns that our pilferage claims over the old-established 
lines amounted to 3^ per cent of the value of our merchandise, but 
the reason that I asked that question was to get the percentage rela¬ 
tionship between the additional charge and what our pilferage 
claims have been in the last 12 months. I find that our pilferage 
claims have been 3J per cent on the old lines and the additional 
charge being 2J per cent, we being the gainer by 1 per cent. 

In addition to that I feel that we would stand a great deal better 
show to give service to our customers and we would rather pay 2^ 
per cent to the steamship company than pay it in the form of a 5 
per cent charge to the insurance company in order to get my money 
back and not deliver merchandise. 

Mr. Edmonds. And not only save money, but get a steamship 
company that will guarantee your goods. 

Mr. Herrick. There have been several references here to-night to 
“ our ” lighters. I would like to ask Mr. Imlay whether those are 
owned or controlled by the Ward Line? 

Mr. Imlay. Just let me get that question. 

Mr. Herrick. You have referred several times in speaking to 
“ our ” lighters ? 

Mr. Imlay. Yes; meaning the lighters in New York. 

Mr. Herrick. I do not know; wherever they are. You refer to 
them as “ our ” lighters. 

Mr. Imlay. Those lighters that were referred to in that matter are 
owned or controlled by the Ward Line. 

Mr. Herrick. Not by a subsidiary? 

Mr. Imlay. No. Pardon me; owned or controlled by the Ward 
Line, possibly through a subsidiary. 

Mr. Herrick. What is the method of delivery at destination as 
regard lighters? Who selects those lighters? 

Mr. Imlay. That depends largely upon conditions. There are 
certain classes of cargo that we handle, which is delivered at ship 
side into the consignee’s own lighters or lighters chartered by them. 

Mr. Herrick. In that case the consignee would select or furnish 
them? 

Mr. Imlay. That is right. 

Mr. Herrick. In other cases, who selects them ? 

Mr. Imlay. Usually the steamship company. 

Mr. Herrick. The consignor has no choice in the matter, has he? 

Mr. Imlay. He might have some choice, but to my knowledge they 
have never exercised the right. 

Mr. Herrick. These watchmen that you spoke of, do they belong 
to a union? 

Mr. Imlay. The watchmen? 

Mr. Herrick. Yes. 

Mr. Imlay. No, sir; not that I know of. 

Mr. Herrick. Thev are exclusively pensioned police officers? 

Mr. Imlay. No; the men of the higher grades are either retired 
policemen or retired firemen. The men who do the actual watching 
are men whose character the police department has looked very 
carefully into and I know not what their previous occupation may 
have been. It is in the record, but I do not know. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 257 


Mr. Herrick. These watchmen have a chance to see all sides of the 
docks on which the goods are stored; that is, the waterside as well 
as the land side? 

Mr. Imlay. The outsides of the wharves are kept free to a large 
extent from any vessels which are inactive, and when there are any 
vessels alongside there are watchmen placed at advantageous points 
so that they can properly supervise what goods are in and about. 

Mr. Herrick. On the waterside? 

Mr. Imlay. Yes. 

Mr. Herrick. These doors to your sheds are closed at night ? Are 
they locked? 

Mr. Imlay. To all intents and purposes they are locked. They 
are mammoth affairs and it requires considerable power to open 
them. 

Mr. Herrick. They can not be swung open at the bottom ? 

Mr. Imlay. No. 

Mr. Herrick. They are not locked, that is, with a padlock ? 

Mr. Imlay. Not with a padlock. 

Mr. Herrick. Thank you. 

Mr. Burchmore. One more question. The National Industrial 
Traffic League has tried to make its position clear and we would like 
to ask that Mr. Campbell or some one else for the shipowners would 
answer this question that I put to the witness. What is the reason 
or fair objection to the giving by the steamer of a plain contract 
under which it assumes responsibility to deliver to destination all of 
the merchandise that it receives at the point of origin, subject alone 
to marine perils: by which I mean errors of navigation, the act of 
God, and everything of that sort? 

Mr. Campbell. There will be a witness who will go into that. 
Mr. Edmonds, it is our intention to cover that fully; Mr. Hickox 
and others are going into that. 

Mr. Edmonds. Mr. Hickox w T ill cover that to-morrow and it will 
appear in the testimony and you will be able to read it. 

Mr. Burchmore. That is our point and we want to be sure their 
answer is there. 

(Thereupon, at 11 o’clock p. m. the committee adjourned until 
10 o’clock a. m. Wednesday, July 20, 1921.) 


Subcommittee of the Committee on the 

Merchant Marine and Fisheries, 

House of Representatives, 
Washington , Wednesday , July 20,1921 . 

The subcommittee met at 10 o’clock a. m., Hon. Frederick R. Lehl- 
bacli (chairman) presiding. 

Mr. Lehlbach. The Chair is informed that there are two gentle¬ 
men, representatives of the shippers, who found it impossible to get 
here yesterday or the day before, when those representing the 
shippers’ interests were heard, and who desire to be heard at the 
present time. I believe they are Mr. Hylander and Mr. Merriam. 
Is that correct ? 

Mr. Hylander. Yes, sir. 

OOfiSa 21-17 



258 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


STATEMENT OE MR. C. G. HYLANDER, CHICAGO, ILL., REPRE¬ 
SENTING WILLIAM WRIGLEY, JR., CO. • 

Mr. Lehlbach. The hearings necessarily must be concluded to-day, 
and we have quite a number of those representing the shipowners 
still to be heard, and therefore we would like you to be as brief as you 
conveniently can in the development of what you have to say. 

Mr. Hy dander. Mr. Chairman, I want to give you just an oral 
statement now and later in the day to file a written statement with 
you. 

Mr. Lehlbach. That will be perfectly acceptable. 

Mr. Hylander. I represent William Wrigley, Jr., Co., exporters of 
chewing gum to all parts of the world. 

Mr. Lehlbach. Where are you located? 

Mr. Hylander. In Chicago. The exports of our company for 
1919 were $1,700,000; that is the value of the gum exported. In 1920 
the value was $1,400,000. I mention that just to show we are exporters 
interested to that extent. The total chewing gum exported for the 
year 1920 for all exporters from this country was $2,612,540. 

The facts that I wish to call your attention briefly to are some of 
the difficulties that attend the exporting from our country at the 
present time—as I believe that is the nature of this hearing to a cer¬ 
tain extent—one of the first things I want to mention is the matter of 
the steamship liability. Every steamship company fixes its own 
terms of the liability, and we believe there should be a general fixed 
liability for commodities the same as the railroads have—general 
terms, as far as possible. 

For example, in our case we ship a box of chewing gum worth $55. 
The French line, just to give an illustration, only have, a liability of 
$5 per cubic foot, or $100 per package. 

Another drawback to exporting is the bill of lading continuity is not 
guaranteed; that is, where goods are handled by two or three steam¬ 
ship lines it is extremely difficult to fasten the liability for the short¬ 
age. If I may, I will just give briefly an example as to how T that 
works out. We made a shipment from Seattle to Hongkong, China, 
in the latter part of 1918. This was handled by the Pacific Steamship 
Co. in one of their boats to Kobe, Japan, at which port it was turned 
over to the Japanese line, the N. Y. Iv. Co. The value of this gum 
was $87 and consisted of five cases. The Japanese line obtained the 
shipment at Kobe, Japan, and from what we can learn from the 
consignees, it was carried in error, overcarried, to Bombay, India. 
It was then brought back to Hongkong, and arrived there on July 15, 
1919, having left Seattle in December, 1918. It arrived with the 
cases stained with oil, two of them having been broken open and 
renailed. This had been done, as we found through tracing it, be¬ 
tween Bombay and Kobe, Japan. 

This shipment had left Chicago the 11th day of October, 1918. 
Claim was filed with the Wells Shipping Co. in September, 1919, 
who forwarded the papers to the Pacific Steamship Co. The papers 
were passed back and forth between the Pacific Steamship Co., our¬ 
selves, and the Japanese line, and to date we have not obtained settle¬ 
ment. It seems to be a case where you can not collect from the insur¬ 
ance company. It is not exactly a marine peril; it is just simply 
negligence on the part of the steamship company—which one we do 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 259 

not know. It represents pilferage on board of the boat by the em¬ 
ployees of the boat line, and we feel that is negligence for which the 
boat line should pay. We have not been able to establish the respon¬ 
sibility for this loss. I have a letter from the steamship company 
about it. It may take a minute or two to read it. but I would like 
to submit that as evidence with my papers. 

I have two examples here of the troubles that confront the Ameri¬ 
can exporter in connection with boats owned by the Shipping Board 
and operated by agents, J. H. Winchester & Co., of New York City, 
who are supposed to represent the Shipping Board boats. I want 
to give some facts from these two claims, because I believe it covers 
most of what I have to say, to show you these difficulties that attend 
exporting of American goods. 

On October 22, 1920, the steamship Lake Farber sailed from New 
York City, through J. H. Winchester & Co., agents. The goods were 
intended for London. Shipment consisted of 115 cases of chewing 
gum, each case containing 100 boxes. The boat arrived at Bristol, 
England, November 30, 1920. There was a loss, so far as the survey 
showed, of one complete case missing, for which the steamship agents 
at Bristol accepted liability, and a shortage of 174 boxes, for which 
a claim was filed, amounting to $102.74. with J. H. Winchester & Co. 
Now this steamship firm refuses liability for the loss of these 174 
boxes on the theory that they act only as agents for the United 
States Shipping Board; in other words, there seems to be three 
parties according to their advice—the shipowner, the Shipping 
Board; J. H. Winchester & Co., the agents; and then our consignees, 
and they advise that the Shipping Board is represented by the 
American Steamship Owners’ Mutual Protection & Indemnity Asso¬ 
ciation in the settlement of claims. They further maintain that all 
claims must be O. K’d by this organization. 

The clause relating to the filing of claims at destination was com¬ 
plied with. The check for the freight charges was made payable to 
the order of Winchester & Co.; the bill of lading was issued by Win¬ 
chester & Co., steamship agents, and signed by the master. 

J. H. Winchester & Co. took this matter up with the American 
Ship Owners’ Mutual Protection & Indemnity Association, Avho 
claim they are not responsible, as the bill of lading contained the 
clause stating that the steamer is not responsible for breakage, leak¬ 
age, or loss of contents. There was a rubber stamp across the face 
of the bill of lading, as sort of a rider, containing that clause. 

The value of this shipment is $4,600. It occupied about 400 cubic 
feet of space and had a gross weight of about 15,000 pounds. I want 
to read, very briefly, a couple of letters from Winchester & Co., to 
show you the position they take in regard to these claims. This is a 
letter from Winchester & Co., dated March 21, 1921, to ourselves: 

We wish to advise that we act only as agents for the United States Shipping 
Board, so that your contract is with them rather than with us. It has 
always been customary (and we believe has been so recognized by other 
shippers) that where claims arise at the other end that they are handled 
by the agents of the steamer with the receivers’ representatives there, hence 
in our letter of the 4th instant, where we requested that you pursue the 
matter from the other end, was not anything out of the way, but commensurate 
with usual custom. 

We have as yet heard nothing from our agents at Bristol relative to this 
shortage, and undoubtedly they will handle the claim as per usual with the 
receivers. * * * 


260 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


For your guidance, the American Steamship Owners’ Mutual Protection and 
Indemnity Association, of this city, represents the United States Shipping Board 
in the settlement of claims, etc., and before any claims can he paid they must be 
O. K’d by this organization or their representatives abroad, so that if it should 
eventuate that the claim is referred to New York for settlement it will have to 
be made through the medium of the Protection and Indemnity Association. 

We believe that the foregoing will give you a general idea as to how claims 
arising on Shipping Board steamers are handled. 

From past experience we find that some little time elapses before settlements 
are arrived at, undoubtedly due to the fact that the Shipping Board being a 
large organization the claims are numerous, so that some time is bound to 
elapse before settlements can be effected due to the fact that the claims must 
be fully investigated before authorizations for payments are forthcom- 
ing. * * * 

Then they go on to say they believe this protection association is 
doing what the}' can, and continue: 

We do not think that it will be necessary for you to pursue this matter under 
the wording of the Harter Act of 1893, as a settlement will undoubtedly be made 
if it is found that your claim is a just and correct one. 

Now, here is a letter of April 1. I will just give a brief quotation 
from it. They speak about the delay in the settlement and then they 
add this line at the end: 

We regret to note that until this claim is settled that you will refrain from 
shipping any more goods over our lines, but we can only tell you that a very 
great many shippers have claims arise from time to time but who do not for this 
reason stop shipping in our steamers, they knowing quite well what we have to 
contend with when dealing with the Government. 

That is a peculiar phrase, I think, for a steamship agent who repre¬ 
sents the Shipping Board to tell the shipper he may expect ail this 
annoyance because he deals with the Government. That does not 
sound very good to me. 

Mr. Edmonds. You are going to file those letters? 

Mr. Hylander. I am willing to if the chairman so desires. I want 
the chairman to look over this file. I believe, Mr. Chairman, if you 
went into the foreign shipping situation you would be ready to say 
something. 

Mr. Edmonds. You can leave the file with us? 

Mr. Hylander. Yes. sir. 

Mr. Edmonds. You do not need it just now? 

Mr. Hylander. Not just now; no. I want to quote a few of these 
extracts here to emphasize this: 

We hope that we have made ourselves clear that we are powerless in decid¬ 
ing an issue such as this, due to the fact that we are merely acting as agents 
for the United States Shipping Board and are subject to their orders as to what 
steps to take in matters such as these. 

That is an extract from their letter of May 20. Another extract 
from their letter of May 25, 1921: 

* * * We have now received advices from the American Steamship 

Owners’ Mutual Protection and Indemnity Association, who are of the opinion 
that the steamer can not be held responsible for this shortage In view of the 
clause which appeared upon the bills of lading, viz: “ Steamer not responsible 
for breakage, leakage, or loss of contents,” and therefore we can not honor your 
claim. 

I have a similar case. It will just take a few minutes to give it to 
you. This concerns a shipment on board of the steamship Frolona , 
owned by the Shipping Board and operated by J. II. Winchester & 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 261 

Co., sailing from New York City September 11, 1920. The shipment 
consisted of 13,000 boxes of chewing gum, packed in 130 cases. This 
shipment was worth about $5,200 and had a gross weight of 16,000 
pounds and occupied 445 cubic feet. This shipment arrived at desti¬ 
nation. TV e had a survey made and we found that 579 boxes were 
damaged by oil and water. These were paid for. Then there was a 
loss by pilferage of 680 boxes, of. which 280 boxes were paid for on 
the 50-per cent basis; and, Mr. Chairman, when you look that file 
0V tvt ^ y°u w °uld read the part about the 50 per cent. 

Mr. Edmonds. Does not oil make chewing gum more chewy? 

Mr. Hylander. No, sir: it makes it less cliewable. [Laughter.] 
T\ e recovered a part of that through the insurance company. Claim 
was filed through our London (England) house. Then there were 
four cases that arrived empty, and the steamship agents claim that 
they dissolved in the water. This is an impossibility with our 
product; a certain part of it, the chicle, is nonsoluble, so that it is 
utterly ridiculous to say that four cases got there empty and water 
had taken the contents out. That shows the nature of this cor¬ 
respondence : 

The shippers claim that the four cases for which the wood only was delivered 
and total contents missing do not come under the heading of “ pilferages,” but 
should be claimed from the underwriters, as they state that cases were prob¬ 
ably smashed during transit, owing to rough weather. 

And. by the way, the party who wrote the letter, it seems he takes 
joy in the fact that the empty boxes got there. But the gum had been 
taken presumably by the boat employees. 

Another thing that happened in this shipment—there was poor 
stowage. That is another thing the shippers have to contend with. 
The men who load the boat seem to be careless. Ocean theft and 
pilferage seems to be worse mm than it ever was. The owners seem 
to know it and do not apparently take any steps to stop it. In regard 
to the poor stowage, the shipment was placed with oil and lard. 
Any man loading a ship should know in stowing a food product it 
should not be next to oil. 

The total loss on this shipment was $581.80. These letters are 
from James & Hodcler, the agents at Bristol, England, who handled 
the shipment at that end as representing the steamship company. 
As regards the alleged pilferage or loss of contents, they point out 
that chewing gum will dissolve in water, and it is reasonable to sup¬ 
pose that some portion at least of the loss would be attributable to 
this cause. 

I also want to file with the committee a little pamphlet issued by 
the Insurance Co. of North America. It has to do with marine 
insurance, and contains the idea that nowadays the losses are increas¬ 
ing, insurance rates are going up, steamship companies are not hold¬ 
ing themselves liable, and there should be an end to that some time 
or other. It is an interesting pamphlet. You may have seen it. 

Mr. Lehlbach. I think we have already heard from the Insurance 
Co. of North America. 

Mr. Hylander. You do not want me to file that, then? 

Mr. Lehlbach. Yes; you may file it. 

(The pamphlet referred to was fHed with the committee.) 

Mr. Hylander. In exporting there seems to be the thought come 
to our mind that sooner or later a clear bill of lading should be given 


262 THEFT, ETC., OF EXPORT 1 AND IMPORT SHIPMENTS. 

that is combined; that is, if it is a shipment from an inland point 
by rail and water, you should combine it all in one bill of lading that 
would be a legal binding contract on the rail carriers and the steam¬ 
ship carriers, that would at least bind the steamship company line 
that leaves our American port. I do not believe you could bind the 
line leaving the foreign port, England or any other country; but at 
least the railroad agent should act. with full power of attorney for 
the steamship line which leaves an American port and provide a bill 
of lading that would satisfy the bankers and be sufficient for finan¬ 
cial transactions, such as bill of lading attached to draft. 

Then, in regard to noncompetitive steamship lines, where they 
exist in carrying shipments from the United States ports to foreign 
ports, and a monopoly is thereby obtained, some control should be 
held over the steamer rates and conditions should, in no case, be 
forced upon the consignor which are prohibitive or overburdensome. 
Rates should be fair competitive rates, the same as if competition 
existed. In domestic rail transportation you can make a small ship¬ 
ment from Washington, say, to a point in nearby Virginia by rail, 
where there is no competition, and the act to regulate commerce 
covers that shipment just the same as it does an important shipment 
to Richmond or Nashville, where there is competition. The steam¬ 
ship business suffers somewhat on that account; where there is no 
competition overburdensome restrictions are put on the shippers in 
the bills of lading. 

Some arrangements should be made also to issue bill of lading 
with a greater leeway between the date of issuance and the date of 
sailing, especially where goods are on hand for export, to enable the 
shipper to arrange for financial transactions and permit the arrival 
in consignee’s hands of the original documents before the shipment 
reaches destination. 

Now, as to goods in bond from inland ports. On a through com¬ 
bined bill of lading a declaration of the customs officer at port of exit 
by the consignor or advice by the railway company of arrival of 
goods in bond should be sufficient evidence of the notification of the 
customs officer of the export of the bonded goods, especially where 
the invoice specifically declares the identical goods, and the respec¬ 
tive manifest showing shipment of the goods should be conclusive 
proof. Where goods are sent in bond and sealed or the car is sealed 
they have already been inspected by customs authorities as to count 
or weight. 

Then delays, with a shipment moving from, say, Chicago to San 
Francisco and then by steamer. They sometimes have delays on ac¬ 
count of a mix up in the bond arrangements at the port of export. 

Then as to the liability of the various steamship lines. This seems 
to vary considerably. They seem to figure on so much per package. 
You have probably had evidence here in regard to that. There 
seems to be need for some uniformity there. 

Now, has this hearing any scope in regard to import shipments? 

Mr. Lehlbach. It has not been touched on particularly, but there 
is no reason why you could not do so, briefly, if you care to. 

Mr. Edmonds. Yes; if it was a loss on an import shipment, it 
should be taken up at the same time, I think. 

Mr. Hylander. For instance, in the import of chicle, one of our 
raw materials, bringing it from Mexico to New York and New 


THEFT, ETC., OF EXPORT' AND IMPORT SHIPMENTS. 263 

Orleans, the steamship bill of lading carries a clause of $8 a cubic foot. 
That has been in there for quite a while. The steamship rates, at least 
during the war and since, have been very high, and that liability 
has not been extended; it is still kept at that figure. It does not 
near compensate for a loss. It is our humble opinion that that lia¬ 
bility clause should be extended and let the rates take care of that, 
and provide full liability instead of partial liability. It seems to 
be almost impossible to take out theft and pilferage insurance. This 
particular steamship company in the past would take care of that 
full liability, provided you paid an additional fee of If per cent, 
based on the value of the goods. 

Mr. Edmonds. Is that the Ward Line? 

Mr. Hylander. That is the Ward Line. 

Mr. Edmonds. They testified last night that they will take care 
of the insurance on an insured bill of lading now at 2J per cent. 

Mr. Hylander. Two and a half per cent on what? 

Mr. Edmonds. On the value of the goods. 

Mr. Hylander. That is certainly a high figure. 

Mr. Edmonds. That is a good deal less than $8 a cubic foot. 

Mr. Hylander. That $8 a cubic foot represents the extreme lia¬ 
bility. 

Mr. Edmonds. That is a good deal less than theft and pilferage in¬ 
surance rates to-day. 

Mr. Hylander. We had considerable losses in that respect, in re¬ 
gard to imports of chicle, where we are obliged to accept a small 
amount for considerable losses, and my idea is that has not been 
changed. Eight dollars a cubic foot has not gone very far in cover¬ 
ing our losses. 

Mr. Edmonds. Still, you have protection to the extent of the $8 a 
foot, and then you can take out theft and pilferage insurance above 

that. 

Mr. Hylander. If we want to protect that part of it, if we do not 
want to accept limited liability, we have to protect it by insurance. 

Mr. Edmonds. And it does not always show that the loss occurs on 
the steamship, does it? 

Mr. Hylander. The loss occurs right on the boat; the employees 
take the stuff. 

Mr. Edmonds. You mean they take a block of it and sell it? 

Mr. Hylander. They either chew it or dispose of it. That is one 
of the things we complain about. The steamship company ap¬ 
parently is aware of these thefts, and they seem to be content with 
their employees, because they know they have this limited liability 
or no liability and do not take any steps to stop it. 

Mr. Merriam. Sometimes they steal it and sell it for more money, 
too, than you receive from the steamship company ? 

Mr. Hylander. Yes; a shipment may be worth to them but $200,- 
and that has been paid. It may be that the actual value of that 
shipment is $800 and that chicle that has been lost, or certain bags 
of it, might be found later and may be sold at auction and they get 
$500 for it whereas they only settled with us for $200. 

Mr. Edmonds. In that case, does not the steamship company pay 
the amount to you, or to the insurance company, having found the 
goods? 


264 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Hylander. In the ease of this particular line we deal with 
them direct. They hold themselves out for a certain liability and 
we do not take out additional insurance. 

Mr. Edmonds. Suppose they find the goods afterwards; don't 
they return the goods to you? 

Mr. Hylander. Maybe they do and maybe they do not. 

Mr. Kirkpatrick. What do you do in the case of the Ward Line; 
do you pay that extra If per cent ? 

Mr. Hylander. No, sir. 

Mr. Kirkpatrick. You just simply ship it as ordinary cargo and 
take your chances? 

Mr. Hylander. Yes, sir. 

Mr. Kirkpatrick. Without taking out any insurance? 

Mr. Hylander. No insurance except the limited liability. 

Mr. Kirkpatrick. You do not take out any insurance? 

Mr. Hylander. No. I just want to add a word about some marine 
insurance figures. Your letter mentions that. In handling in¬ 
surance there is first the marine insurance, then theft and pilferage, 
and sometimes we have a combination; that is, marine, theft, and pil- 
ferage. In looking over our statement here I find in 1920 we in¬ 
sured goods to the value of $1,755,000. The insurance premiums 
paid were $5,567.43. The losses that we knew occurred amounted 
to $837. The losses collected for amounted to $673.42. Now, while 
that loss we incurred may seem small to you, if one big shipment 
was lost it would, of course, greatly exceed that $5,000 paid out. 

Now, taking the theft and pilferage part of it, the premiums paid 
were $324.54; the loss that occurred was $330.91. You see, the in¬ 
surance companies have to exist on what premiums we pay them, 
and there are so many shortages on the ocean now that where the 
shortage exceeds the premiums they are not so enthusiastic about this 
theft and pilferage business. That is the reason I mentioned this 
pamphlet here. 

Are there any questions, Mr. Chairman? 

Dr. Huebner. Are your losses as big now as they have been, in the 
way of theft and pilferage? 

Mr. Hylander. Yes, sir; they have been increasing. 

Dr. Huebner. The}^ have been increasing; there has been no de¬ 
crease ? 

Mr. Hylander. No decrease. 

Dr. Huebner. We were told last night that that problem was 
solving itself. The representative of the Ward Line made that 
statement. You do not find that to be the case in your business? 

Mr. Hylander. Taking our losses as a whole, they are increasing. 
I might mention this fact: It seems like our foreign lines are more 
accommodating and take care of these things better than our own 
Shipping Board. For example, we make enormous shipments to 
Manila and Japan, using Canadian steamships from Vancouver. 
If a shortage is located on the dock when delivery is taken they 
arrange immediate settlement for that shortage; they pay for it 
right there. 

Mr. Kirkpatrick. Do they pay on the basis of their liability in 
the bill of lading? 

Mr. Hylander. They pay according to the invoice value. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 265 

Mr. Loines. I would like to ask the date of those shipments you 
refer to as being made through J. H. Winchester & Co. 

Mr. Hylander. The date of the shipments? 

Mr. Loines. Yes; the dates of those two shipments you referred 
to in your testimony. 

Mr. Hylander. I would be glad to give them to you. In the case 
of the shipment on the Lake Farber from New York City, it was 
November 1, 1920, en route to Bristol, England. The goods were 
destined for London. 

The second shipment from New York City was September 11, 
1920, on the steamship Lake Frolona. It arrived at Bristol October 
8, 1920. 

Later in the day I will file a written statement with you, Mr. 
Chairman. 

Mr. Edmonds. I would like to ask you a little further about your 
across-the-Pacific shipments. You ship over the Canadian Pacific 
Line? 

Mr. Hylander. Yes, sir. 

Mr. Edmonds. Is their bill of lading similar to the bill of lading 
issued by the Pacific Mail? 

Mr. Hylander. Nearly all the steamship companies’ bills of lad¬ 
ing are slightly different. I have not just in mind how the liability 
clause reads. 

Mr. Edmonds. In their principal features they are the same? 

Mr. Hylander. Yes, sir. 

Mr. Edmonds. Why do they make the exception? Do they dis¬ 
cover the shortage when they unload the steamer ? 

Mr. Hylander. That shortage may occur while the goods are in 
their custody and may be found when they make delivery to the 
consignee. 

Mr. Edmonds. You mean when they make delivery in Manila? 

Mr. Hylander. In Manila or to whatever port it is exported. 

Mr. Edmonds. And they make settlement immediately upon notifi¬ 
cation of that? 

Mr. Hylander. They make settlement with the consignee at once 
if he files claim, or if it is returned here to us they make settlement 
as soon as the}^ get the papers. 

Mr. Edmonds. They do not take advantage of the limitation of 
liability in their bill of lading at all? They make full settlement? 

Mr. Hylander. They make full settlement. They are after the 
business and are very accommodating. 

Mr. Edmonds. Do they do that on the Canadian shipments also? 

Mr. Hylander. I do not know about the Canadian shipments. 

Mr. Edmonds. But you know they do on American shipments, 
because they do that with you? 

Mr. Hylander. Yes, sir. 

Mr. Edmonds. And they do not take advantage of the limitation 
of liability at all? 

Mr. Hylander. No, sir. 

Mr. Edmonds. Don’t they question the claim in any way in ac¬ 
cordance with the bill of lading? 

Mr. Hylander. If the man at the dock who makes the delivery 
gets the record of the shortage can see with his own eyes something 
is gone, they accept that and settle on it without question. 


266 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Edmonds. How do you ship; over what road? 

Mr. Hylander. The Soo Line and the Canadian Pacific. 

Mr. Edmonds. You send your shipments over the Canadian Pacific 
Railroad ? 

Mr. Hylander. Yes, sir. 

Mr. Edmonds. And the steamers are owned by the Canadian 
Pacific, by which you ship to Manila and China? 

Mr. Hylander. As far as we know. 

Mr. Edmonds. That, of course, would be a complete rail and water 
shipment by one corporation all the way through to Manila. 

Mr. Hylander. It is not one corporation; it is one continuous 
interest. I understand the Canadian Pacific Railroad is a separate 
corporation from the boat line. 

Mr. Edmonds. It is*one interest, however, which is one and the same 

thing. 

Mr. Hylander. The same thing. 

Mr. Senecal. What is the average value of each case of chewing 
gum ? 

Mr. Hylander. Between our branch houses, it is about $40. 

Mr. Senecal. It is less than $100? 

Mr. Hylander. Yes, sir. The value between the branch house and 
the customer is about $55. 

(The paper filed by Mr. Hylander for the record is as follows:) 

Hearing Before the Merchant Marine Committee of the House of Repre¬ 
sentatives—Statement of William Wrigley, Jr., Co. 

Our company is interested in the building up of the American export trade, 
and in response to your invitation herewith submith the following facts as to 
our experience in the exportation of chewing gum. 

For 1919 our total exports of chewing gum amounted to $1,739,124.40, and 
for 1920. $1,419,334.13. For 1920 the total amount of gum exported by all 
American manufacturers amounted to $2,612,540. 

A foreign trade drawback, according to our experience is that we do not 
have a bill of lading continuity. Where goods are handled by two or more 
steamship lines it is extremely difficult to fasten liability for loss or damage 
upon a particular steamship line. As an illustration of the difficulties attend¬ 
ing foreign trade we refer to a shipment of live cases of chewing gum, value 
$87, United States currency, forwarded from Chicago October 11, 1918, thence 
from Seattle December 19, 1918, via steamship Wainicright to Hongkong, 
China. This gum was handled by the above steamer to Kobe. Japan, from 
which port it moved February 11, 1919, in steamship Himh-uu, being over¬ 
carried through negligence, apparently, of the Nippon Yusen Kaisha Co. to 
Bombay, India. The gum was found through tracing in the Bombay Port-Trust 
Godowns, being forwarded back to Hongkong, at which port it arrived July 
15, 1919, in steamship Kaifuku Marti. The chewing gum was stained with 
oil. two cases were broken open, and the remainder had been renailed. In other 
words, the gum was not in salable condition, being, therefore, rejected by the 
consignees. Note in particular the time consumed in transit. Claim was tiled 
upon receiving report from consignees in September, 1919, the papers being 
submitted to the Wells Shipping Co., who in turn submitted them to the Pacific 
Steamship Co., the latter line handling the claim with the N. Y. K. Co. This 
claim has not been settled to date and there seems to be slight prospect of 
attaining settlement. In this instance we can not recover from the Marine Insur¬ 
ance Co., and to our mind it is simply a case of negligence on the part of the 
steamsh p carriers. Attached you will find letter dated July 9, 1921, from the 
Pacific Steamship Co., Seattle, which gives some idea as to excuses offered at 
the present time by the ocean lines. 

Another illustration covering the tactics of the ocean carriers with reference 
to the shippers' products for foreign lands is in connection with 130 cases chew¬ 
ing gum, value about $5,200: gross weight. 15.498 pounds; cubic space occu- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 267 


’ w ^' c ^ cleared from New York City on or about September 11, 
I.»-0, via steamship Lake Frolona, operated by J. H. Winchester & Co., New 
lei k City, the owners being the United States Shipping Board, destination 
shipment, London, England. This boat arrived at Bristol. England, October 8, 
D-O. A total of 12 cases and 59 boxes (1,259 boxes) was damaged either by 
oil, water, or pilferage. The amount damaged by oil and water was 579 boxes, 
was paid for, remittance being received by the Sea Insurance Co. The loss by 
pilferage, 980 boxes, was disputed by the steamship representatives in Bristol, 
England, although our London representative recovered for 280 boxes on the 
50 per cent basis. In connection with this pilferage, four empty wooden cases 
were broken when delivered, and James & Hodder disclaim liability for the 
‘Contents of these cases, making the claim that they were damaged and contents 
lost through rough weather and perils of the sea, and, further, that the con¬ 
tents of the cases dissolved in the water is a ridiculous claim, inasmuch as 
chewing gum to a certain extent is nonsoluble. It is our opinion that the gum 
was taken from the cases while they were in possession of the steamship com¬ 
pany by their servants. The base material, chicle, is not soluble. Further¬ 
more. this shipment was stowed at New York City without sufficient discretion, 
being placed with oil and lard. The attention of your honorable committee is 
called to our original private file of facts. 

Another example of poor service and the kind of treatment that exasperates 
the American exporter is our shipment of 115 cases chewing gum to London 
from New York City on or about November 1, 1920, on board the steamship 
Lake Farbcr, which was controlled by J. FI. Winchester Co., agents, the owners 
being the United States Shipping Board. Shipment arrived at Bristol Novem¬ 
ber 30. 1920, with one complete case missing, for which James & Hodder, steam¬ 
ship agents at Bristol, England, accepted liability. There was also a shortage 
of 174 boxes chewing gum, for which claim to the amount of $102.74 was tiled 
with J. H. Winchester Co. The latter parties repudiate liability with the state¬ 
ment that they only act as agents for the United States Shipping Board and 
that said board, in the settlement of claims, is represented by the American 
Steamship Owners Mutual Protection and Indemnity Association, and that all 
claims must be approved for payment by this organization. The bill of lading 
issued was on the form of J. II. Winchester Co. and was signed by E. IV. 
Hickey, master. The Winchester people took the matter up with the Ameri¬ 
can Steamship Owners’ Mutual Protection and Indemnity Association, who 
contend that they are not responsible, inasmuch as the bill of lading contained 
a rider clause stipulating that “ steamer not responsible for breakage, leakage, 
or loss of contents.” 

This shipment had a value of about $4,GOO, occupied 397 cubic feet of space, 
and had gross weight of 14,714 pounds. We submit herewith for the perusal 
of your honorable committee our original fde in this particular case. 

With regard to import shipments of raw material, we call attention to chicle 
which moves from Mexico to the United States. The limited liability of the 
New York & Cuba Mail Steamship Co. (Ward Line) is only $8 per cubic 
foot. This is the only basis on which they will make settlement for shortage. 
If they assume full invoice liability we are compelled to pay an additional fee 
of 1§ per cent of the value of the chicle. Their bill of lading clause stipulating 
the above-mentioned limited liability, as we understand it, has been in effect 
for some time. During the war and the postwar period the freight rates were 
high, so the amount they paid us in settlement of claims did not reach very 
far. A larger liability should have been assumed by the ocean carrier, accord¬ 
ing to our opinion. 

STEAMSHIP LIABILITY. 


Practically every steamship line fixes its own terms of liability. We be¬ 
lieve there should be a general fixed liability for merchandise similar to that 
in effect on domestic business over the railroads. For example, the French line 
limit their liability to $5 per cubic foot, so we would get about $17.50 for a $55 
case of chewing gum. Some consignees claim not only the $55 for a case which 
is lost, but their selling profit as well on orders undelivered. In the case of 
India merchants, they are demanding at least $65 for a case as replacement 
value of the gum, figuring that the gum could not be replaced* under two or 
three months at the earliest and, furthermore, the exchange conditions might 
verv much affect it. We believe that at least the steamship lines which enter 
Amercan ports should be responsible for the full value of the gum. The cou¬ 
riers should not under any condition be permitted to escape from their liability 


268 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


when accepting business from United States of America territory on such busi¬ 
ness as is concluded in United States of America territory. 

TRANSSHIPMENT OF MERCHANDISE. 

Where goods are transshipped on the ocean, the shipper and consignee should 
be notified, the name of the new steamer being quoted. In case of transship¬ 
ment some arrangement should be made for liability of carriers while the goods 
are on dock or in storage at transshipping point. 

NONCOMPETITIVE LINES. 

Where they exist in carrying shipments from United States ports to foreign 
ports, and a monopoly is thereby obtained, some control should he held over the 
steamer rates, and conditions should in no case be forced upon the consignor 
which are prohibitive or overburdensome. Rates should be fair comparative 
rates, as if competition existed. 

ISSUANCE OF DILLS OF LADING. 

Some arrangements should be made to issue bill of lading with a greater 
leeway between the date of issuance and the date of sailing, especially where 
goods are on hand, to enable the shipper to arrange for financial transactions and 
permit the arrival in consignee’s hands of the original documents before the 
shipment reaches destination. 

THROUGH COMBINED BILLS OF LADING. 

We believe that for a rail and ocean movement there should be a legal, bind¬ 
ing contract of a reasonable nature on the rail and steamship carriers. Space on 
a steamship is obtained before the shipment is offered the rail carrier at an 
inland point; then why should it be necessary to change a through bill of lading 
for an ocean-going bill of lading? The railroad company should act with full 
power of attorney for the steamship carrier, at least for such steamship line as 
leaves an American port. This through bill of lading should satisfy the bankers ; 
that is, be sufficient for financial transaction. 

BOND FOR NONARRIVAL OF STEAMSHIP DOCUMENTS ON OR BEFORE DATE OF ARRIVAL 

OF RESPECTIVE STEAMER. 

This should be fixed in an equitable manner so that conditions are not bur¬ 
densome to firms of repute. Very often mails carrying the documents, owing 
to diversion of route or stress of weather or other causes, do not deliver the 
steamer documents prior to the arrival of the steamer carrying the goods. The 
amount of the bond should in no case exceed the value of the goods, especially 
when it is clear from the manifest that the goods are intended for a certain 
house and are not to order. 

In case of storage, storage terms should be reasonable and a few days’ limit 
should be arranged free of charge, during which time the steam carrier, or its 
agent, should take care of the storage except where customhouses are to be used, 
and then storage charges should only be debited at the absolute net cost. 

GOODS IN BOND FROM INLAND PORTS. 

On a through combined bill of lading a declaration of the customs officer at 
port of exit by the consignor or advice by the railway company of arrival of 
goods in bond should be sufficient evidence of the notification of the customs 
officer of the export of the bonded goods, especially where the invoice specifically 
declares the identical goods, and the respective manifest showing shipment of 
the goods conclusive proof. Where goods are sent in bond and sealed, or the car 
sealed, they have already been inspected by customs authorities as to count or 
weight. 


NON SAILING ON STEAMER ON WHICH SPACE HAS BEEN RESERVED. 

In the case of delay of departure, we believe the obligation should remain to 
the steamship company to inform the consignor or his representative imme- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 269 


dintely. This is most important where bills of lading have been attached to 
draft and sent through a bank, and where conditions imposed on consignee are 
such that he p;iys draft on presentation. The consignee is divested of his 
money weeks before he should be and it is not conducive to American trade and 
good will to have such practices put through. In most instances the consignee 
is very willing to pay for goods on arrival, but if they do not happen to be on 
steamei stated on draft or document the bank usually insists on payment, 
goods or no goods. Such a change of steamer of same line, or particularly a 
change to steamer of another carrying line, should be an option to the consignor 
to accept or reject. 

BILL OF LADING CLAUSES. 

Should be as near alike in various bills of lading as possible. Standard 
routes should have standard clauses all alike. For example, steamers plying 
from New York or New Orleans to South America should issue a standard 
South American bill of lading. 

EXPORT INSURANCE. 

The insured value of our marine insurance for 1920 was $1,687,879, with 
premiums paid, $4,848.48. losses incurred and collected being $273.24. The 
theft and pilferage insurance value was $39,956, with premium paid, $324.54, 
and losses incurred, $330.91. The combination insured value—that is, general 
and particular average, combined with theft and pilferage—was $28,116; 
premium paid, $394.41; losses incurred, $232.94. We do not often take out 
theft and pilferage insurance. It is expensive, and in one instance, from San 
Francisco to Manzanillo, Mexico, it is 34 per cent for a five-day run. The 
insurance companies are not enthusiastic about taking the risk of theft and 
pilferage. The losses, according to our experience, from theft and pilferage are 
increasing in all parts of the world. Something must be done to correct this 
evil or American foreign trade will most surely suffer a setback. The insurance 
companies, as we have reason to believe, are concerned, and their rates continue 
to advance. Their representative is present at the hearing, and we invite your 
attention to circular notice issued a short time ago by the Insurance Company 
of North America, Philadelphia. 

As an American exporter, respectfully request that your committee give the 
above facts the most careful consideration. 

Wm. Wrigley, Jr., Co., 

C. G. Hylander, 

Traffic Manager. 

STATEMENT OF ME. EALPH MEEEIAM, CHICAGO, ILL., EEPEE- 
SENTING WM. WEIGLEY, JE., CO. 

Mr. Merriam. Mr. Chairman, I think the committee is probably 
aware of the fact there has been a hearing in the last few months 
before the Interstate Commerce Commission on the question of the 
prescription of a suitable export bill of lading under the terms of the 
new transportation act. There are some things in contemplation in 
that proceeding which I think ought to be made matters of legisla¬ 
tion, and I wish to speak of them very briefly. 

Legislation should be passed, in my opinion, requiring the rail 
and ocean carriers to dispatch notices as follows: 

First. On an export shipment from an inland point in the United 
States to a foreign port, where the goods are prevented by any 
cause from going from the port of export on the vessel intended, the 
rail carrier from the inland point should be required to dispatch 
notice to the shipper of this fact. 

Second. In case of transshipment of the goods on the water, the 
ocean vessel should be required to dispatch notice thereof to both 
the shipper and the consignee. 


270 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Third. In case the vessel is quarantined and the goods discharged 
in a depot or lazarette, the said vessel should be required to dispatch 
notice thereof to the shipper and the consignee. 

Fourth. If goods are not taken by the consignee promptly upon 
discharge of the vessel, and the vessel enters and lands them, or puts 
them into a craft or ashore, the vessel should be required by statute 
to dispatch notice thereof to the shipper and consignee. 

Fifth. If in the movement from the original port of export to final 
destination port the goods fail to go in any vessel for which intended 
and the vessel carrier forwards them by other vessel or vessels,, it 
should be required by statute to dispatch notice thereof to the 
shipper. 

Sixth. In case the regular vessel service to final port of delivery is,, 
for any reason, suspended or interrupted, and the carrier, at the 
option of the owner or consignee of the goods or the holder of the 
bill of lading, forwards the goods to the nearest available port as a 
final delivery, the vessel should be required by statute to dispatch 
notice thereof to the shipper and consignee. 

I want to say one word in that connection, and that is this, that 
when you are shipping goods to a foreign country you have to know 
where those goods are and what is happening to them. I think the 
rail carriers and the ocean carriers should be required to give these 
notices, otherwise the exporter is utterly at sea and can not advise 
his customers what is happening to the goods, and it is very ..difficult 
to carry on business. These notices may be provided for in the bill 
of lading prescribed by the Interstate Commerce Commission, but I 
think they should be provided, for definitely by statute,‘ so as. to be 
put into permanent form. Xotwithstanding the interstate commerce 
act, as amended by the transportation act of 1920, authorizes the In¬ 
terstate Commerce Commission to make such rules and regulations, 
not inconsistent with said section, as will prescribe the form of a 
through bill of lading on export shipments from inland points of 
the United States to foreign ports, this authority of the commission 
should, in my opinion, be enlarged. The commission should be em¬ 
powered to prescribe the form and substantially all the terms and 
conditions of the said bill of lading except the rates charged. I do 
not mean by that to question the present power of the commission in 
the proceeding in which it is now engaged; I think it has the power 
to carry out the scope of that proceeding, but I think its power ought 
to be strengthened somewhat in the matter just suggested. 

The original common law and maritime law liability of ocean and 
other water carriers as insurers of safe transportation and delivery of 
freight should in my view be restored by statute. Such carriers 
should be forbidden by statute to avoid or limit this liability by 
contract. They should be forbidden by statute to exempt themselves 
from liability for loss, damage, or injury arising from specific causes; 
they should be forbidden by statute to limit their liability to specified 
sums or to agreed valuations. Such exemptions as the common law 
or maritime law, independent of stipulations in the shipping con¬ 
tract and independent of statutes, has given them they should retain— 
for example, the exemptions from acts of God, the public enemy, or 
any other of the well-recognized exemptions prescribed by law. 
Otherwise they should be made insurers of the safe delivery and 
transportation of the freight committed to them. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 271 


. To accomplish this purpose I think that certain sections of the 
Harter Act should he repealed. I will not go into the details of that 
statute; it is familiar to all of us. I suggest that section 1 should be 
repealed. 

Mr. Lehlbach. Do you suggest anything in its place? 

Mr. Merriam. I am going to make a suggestion. 1 think that sec¬ 
tion 2 should be repealed; also section 3. [Laughter.] 

With respect to sections 4281 to 4289 of the Revised Statutes, I 
would have the following suggestions to make: I think that section 
4281 should be allowed to stand; section 4282 should be repealed; 
section 4283, limiting the liability of the owner not to exceed his 
interest, should be allowed to stand; section 4284 should be allowed 
to stand; also section 4285; and also sections 4286, 4287, 4288, and 
4289. 

Now, I am not unaware, Mr. Chairman, that this involves some 
radical changes. If my suggestion has been received with some gasp¬ 
ing breath, as I think I have heard around the table here, it does not 
come to me as a matter of surprise. I may say this, that in my 
practice of the law I have specialized to some extent in interstate 
commerce matters, having a great deal to do with loss and damage 
to freight by carriers by rail. A year or two ago I would not have 
taken this position, but this situation on the ocean has gotten so loose, 
the irresponsibility of the ocean employees is so great, the tendency 
to theft is so great, the passing of the buck from one line to another 
is so extensive that I believe it is for the best interests of everybody— 
the steamship owners, the shippers, and everybody else—to restore 
the old common law and maritime law liability of the ocean vessel. 
I believe it is the only way out. 

I want to give some reasons for that. The shipper is going to 
pay the bill, however it is handled. He is paying it to-day and he 
is paying it extravagantly; that is. he is paying an insurance com¬ 
pany to insure him, he is paying the boat line for certain kinds of 
protection against loss, and the thing is all broken up, it is dis¬ 
tributed. I want to point out one pertinent fact, it seems to me, 
where an outside insurance company insures, which I think should 
be taken into consideration, in the case of insurance against the acts 
of the owner of a steamboat and his employees, over whom the in¬ 
surance company has no control. It certainly has to charge a higher 
premium than if the boat owner himself did that insuring, because 
the boat owner has his own employees under discipline. If you sent 
more of those employees to the penitentiary, if the boat owners were 
active in prosecuting these men for theft, if they had the commer¬ 
cial interest and financial interest to spur them on to that proposi¬ 
tion, we would have less of this thieving. We would have a respon¬ 
sible company handling these goods and not a responsibility divided 
among several interests, and particularly in the case of the railroad, 
where the shipper has no control, if you center the- responsibility in 
these boat lines, which is the cheaper way to do it, and then the boat 
lines have to pay the bill. If these boat lines have to raise their 
rates, let them raise them; but the total will be less than the shipper 
is paying to-day. 

Furthermore, the boat owners to-day are relieved from liability 
in an unscientific way. They cut down their total losses, their total 
risks and payments, by the denial of justice to the individual on his 


272 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


particular claim. I am not criticizing the boat owners; I am trying, 
to appeal to the intelligence of those who are here. I am not criticiz¬ 
ing them, I am not saying they are wrongfully evasive; I am sim¬ 
ply saying this: That the responsibility ought to be centered in them 
for the safe transportation of these goods and then they ought to 
be paid for it in the rates. And they will be paid for it in the rates; 
I am aware of that fact, of course. I am also aware of the fact that 
there are foreign boats, boats of foreign nations, which do not serve 
our ports, and there is possibly certain competition between the boats 
of one country serving other ports and the boats serving our ports. 
But under the commerce clause of the Constitution and under the 
maritime clause, I am fully convinced that Congress has the power 
to determine the extent and degree of responsibility, under the mari¬ 
time law, of any boat, whether it has foreign registry or American 
registry, which serves our ports. 

It seems to me that we have got to depart from this basis of divided 
responsibility in the boat owners and we will have to pay them to 
carry it—the shippers will have to pay them to carry it—but I think 
it will cost less to do so. That risk is already being carried now, 
gentlemen; the shipper carries a part of it, the insurance company 
carries a part of it, and the boat owner carries a part of it. Why 
not let the shippers create an insurance fund and give it to the 
boat owners in the shape of increased rates, if necessary, and let 
them handle the whole thing—center the responsibility, center the 
supervision and control of the goods, center the discipline of the 
employees on the ships, and secure the carrying of this risk at the 
lowest economic figure. 

While that appears to be a rather fundamental change it does seem 
to me it is based somewhat on a sound view of the situation. 

Mr. Campbell. May I ask a question at this point ? 

Mr. Lehlbach. If Mr. Merriam will yield. 

Mr. Merriam. I will do so, but I do not want to take too much time. 

Mr. Campbell. Does your idea contemplate the equivalent of an 
insured bill of lading ? 

Mr. Merriam. Yes; it contemplates the original common law and 
maritime liability, unrestricted by contract or statute. 

Mr. Campbell. And you expect to do away with cargo insurance by 
cargo insurance companies ? 

Mr. Merriam. Well, I do not know. I do not think I could dis¬ 
cuss that intelligently—the whole effect that this would have on in¬ 
surance. I think, possibly, I am trying to drive the insurance com¬ 
pany out of business; but I do not care, if somebody else can per¬ 
form the function more economically. If you are going to ask me 
to discuss charter parties and all that sort of thing- 

Mr. Campbell. I am not going to ask about that at all. You do 
not want to pay two insurances, do you ? 

Mr. Merriam. No. 

Mr. Campbell. One to the shipowner, as you contemplate, and one 
to the cargo underwriter, for the same risks ? 

Mr. Merriam. Not for the same risks; no. 

Mr. Campbell. Yet you want to make the shipowner assume all 
of the risks incident to the common-law carrier ? 

Mr. Merriam. I want him to assume those risks that the common 
law prescribed before they had restrictions of liability in bills of 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 273 

lading or by statute. I do not think I can tell you what field that 
is going to leave for the insurance company; you gentlemen know 
that a good deal better than I do'; but I think there are other risks 
for the insurance company. 

Mr. Edmonds, The acts of God, public enemy, and so on, would still 
have to be insured. 

Mr. Merriam. Yes. 

Mr. Edmonds, Because that liability is not even assumed by the 
ship under the common law; it is not assumed by anybody. 

Mr. Merriam. That is correct. 

Mr. Edmonds Therefore the insurance company would still have 
a function in regard to hull and cargo insurance? 

Mr. Merriam. Yes, sir. 

Mr. Edmonds. Not that I am talking for any insurance company 
at all; but I just want to see, if we pass this bill, whether there would 
be any assumption in the part of the shipowner of the entire insurance 
against acts of God and all that kind of thing. 

Mr. Merriam. There would not be, as I understand the law. There 
are certain exceptions well established and fixed by the common law 
itself; and if the shipper did not want to carry those, then he would 
have to insure against them. 

Mr. Edmonds, The common law would still except acts of God and 
the public enemy, would it ? 

Mr. Merriam. Yes, sir. 

Mr. Lehlbach. As a matter of fact, the common law imposes lia¬ 
bility on the carrier only for the results of his negligence as a bailee ? 

Mr. Merriam. I do not agree with you on that. 

Mr. Lehlbach. How much further does it go? 

Mr. Merriam. It makes him an insurer and makes him absolutely 
liable for the safe delivery of the goods, irrespective of his negligence 
and although he may be exercising reasonable care, except in those in¬ 
stances which the law defines, namely, act of God, public enemy, and 
there may be some others. 

Mr. Edmonds, If you wipe out the Harter Act would that be taken 
out? 

Mr. Merriam. You would have to have some statute which would 
prevent the carriers from limiting that liability in the shipping con¬ 
tract ; you would have to have an affirmative statute to that effect. 

Mr. Edmonds, In other words, you would have to have a statute that 
would still exempt acts of God. 

Mr. Merriam. I can explain that very simply: We have done that 
in the case of the rail carriers; the Cummins amendment does that 
very thing. The carriers to-day can not stipulate in their shipping 
contracts for exceptions either as to the causes of liability, as fire, for 
instance, nor as to the amount of their liability in dollars and cents; 
nor as to an agreed valuation; except, in respect to agreed valuations, 
they may do so with the consent of the Interstate Commerce Com¬ 
mission where the rates are based on valuations, with the consent and 
upon a direct order of the commission. I think we ought to have the 
same thing for the ocean carriers, with this possible exception: That 
I do not say that the common law of the ocean carriers, the maritime 
law, is exactly the same as the common law of the land carriers. 

00683—21-18 


274 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Edmonds. Let us take a concrete case of a shipment to Peru, 
we will say, from Chicago. The goods are shipped by rail from Chi¬ 
cago and placed on a steamer. The steamer takes them to Peru and 
delivers them to the customhouse or delivers them on a lighter. The 
minute that cargo gets on the lighter, unless the steamship company 
should own that lighter—which would be impossible for all the ports 
along the coast of South America there for a steamship company to 
carry on those lighter operations with only one steamer going there 
a month—that cargo would be out of the hands of the steamship com¬ 
pany. Then it would go ashore and might have to go two or three 
hundred miles inland on the railroad and have to pass through the 
customhouse. 

Mr. Merriam. Yes, sir. 

Mr. Edmonds. Now, if you are going to make the steamship owner 
liable until he delivers to the consignee, it would be impossible for 
them to accept the risk without a tremendously heavy cost. 

Mr. Merriam. I said to the port of destination. 

Mr. Edmonds. But “ to the port ” has a different meaning in a 
great many places. It may not be possible for the steamship to de¬ 
liver at the port; it may have to lie out in the ocean or out in the 
stream. 

Mr. Merriam. Yes, sir. 

Mr. Edmonds. And the cargo may have to be lightered, and when 
they deliver at the end of ship’s tackle, under the bill of lading at 
the present time, they consider their liability has terminated, as far 
as the boat is concerned, and I believe rightly so. 

Mr. Merriam. What I would mean by this provision is that where 
the steamship company, at or near the port, makes its customary de¬ 
livery, that is where its liability w T ould terminate. 

Mr. Edmonds. Who would take the liability up after that ? . 

Mr. Merriam. If it was an inland shipment, I do not know that 
my plan would cover it ; I do not know whether we can cover the 
liability of the railroad in another country and over which we have 
not jurisdiction. 

Mr. Edmonds. Suppose it would be delivered, then, just at the port, 
but would still have to be dumped into a lighter and go through a 
customs house. The officials of the customs house might be dishonest. 

Mr. Merriam. Yes, sir. 

Mr. Edmonds. The men on the lighter might be dishonest. 

Mr. Merriam. Yes, sir. 

Mr. Edmonds. Then how can you deliver at the port, even? You 
can not deliver through the customs house , at these places to the 
consignee. 

Mr. Merriam. Delivery to the port I would understand would be 
delivery to the lighter; in other words, delivery at the port in the 
customary way in which delivery is made at that point. 

Mr. Edmonds. Then you would consider under that that all liabil¬ 
ity, outside of this insurance question, might have to fall on the 
owner of the goods? 

Mr. Merriam. That might be so. 

Mr. Edmonds. If he is going to deliver them c. i. f. 

Mr. Merriam. That might be so. I will say this, if I understand 
you correctly, that where the steamer is liable for delivery to the 
port of destination, its liability should terminate when it* has de- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 275 


livered in the customary way in which delivery is made at that point. 
Then when it has made delivery in the customary way at port of des¬ 
tination, it seems to me its liability is terminated. 

Commissioner Lissner. Under your plan, would it not become nec¬ 
essary for a vessel owner to insure his liability ? 

Mr. Merriam. I do not know. 

Commissioner Lissner. \ ou think he could afford to carry that 
liability without insurance, do you? 

Mr. Merriam. Yes, sir; if it is paid for in the rate, I think he 
could. It would depend on his rate. If the vessel owners generally 
insured that liability, they would have to have sufficient rates to pay 
the insurance premium; and if they paid it themselves, they would 
have to have a fund created to pay it. The vessel owners have not 
any money ordinarily except what the shippers pa}^ them. My point 
is this, that it is more necessary to center that responsibility of the 
vessel in the vessel owner and to pay him for it and put the whole 
responsibility on him, than it is to divide it between the shipper, 
the insurance company and the vessel owner as at present. 

Now, I want to make a general statement and that concludes 
my views. There never was anything advocated that somebody did 
not start it, Mr. Chairman; there never was any idea advocated that 
was not ridiculed when it was started. When they talked about 
making our friend, the first carrier on rail shipments in this country, 
liable for the losses of the connecting carriers our railroad friends 
held up their hands in holy horror. They said, “It is unconstitutional; 
it is a violation of the right of contract; it is a committal of every 
unconstitutional crime ever committed in this country;” and when 
that statute was passed the railroads fought it bitterly. It went to 
the Supreme Court of the United States in half a dozen cases, in¬ 
volving different phases of it, and the Supreme Court sustained that 
statute, and it is one of the finest pieces of legislation ever passed 
in this country. To-day you can get your claim paid by the railroad. 
The situation has immensely improved. If you file your claim with 
the terminal carrier he would handle it for the first carrier and 
handle it for all the intervening lines, because they know he can 
handle it just as well and carefully as they could do for themselves: 
or, if it is convenient, you can file it with the first carrier. You have 
a centralized control. 

Mr. Edmonds. It is fairly well reflected, too, in the railroad rates, 
is it not? * 

Mr. Merriam. Then let it be reflected. The shippers had better 
pay for it as a whole than, for particular shipments, to pay the whole 
thing in a denial of settlement of their loss and damage claims. 
Somebody has got to pay it. I represent only certain shippers here, 
but I can say, as far as I am concerned, I think the shippers would 
cheerfully pay whatever rates are involved rather than to pay it 
through the denial of their loss and damage claims. And when loss 
and damage claims do occur they ought to be paid in full, and if 
there is any diminution in them it ought to be due to constructive 
work in protecting their risks, it seems to me. We ought to get some¬ 
thing like the concentrated responsibility they have when they ship 
in foreign countries. Of course, these gentlemen will all say it is 
impossible: but take the German Government, our late enemy: An 
obscure German manufacturer away back in the forest could open up 


276 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

a little factory to manufacture stuff and handle it over the railroad 
and go to the bank and get his money and forget all about it. The 
German Government in cooperation Avitli the steamship line would 
deliver that stuff in Timbuctoo safely, and if they did not deliver 
safely they would see that he got his money. That is the reason 
they were making progress in gaining the trade of the world, and 
that is the reason they are gaining it to-day. That is the Avav they 
work it. 

You can ridicule that, but we ought to have a concentrated re¬ 
sponsibility. If you deliver an ocean shipment to an inland carrier 
in the United States, that inland carrier ought to be responsible all 
the way through to destination. He ought to work out his interrail 
and ocean connections and if stuff is lost he ought to handle that 
the way the railroad carriers do. That is the efficient way to do it. 

These ocean carriers are destroying their own traffic; they are 
putting obstacles in the way of getting business. If you want to 
give up responsible handling and pay our claims and quit passing 
the buck we will pay you for the service, gentlemen, and we will 
grve you more business. I belie\ T e it is in the interest of the steam¬ 
ship owner. Of course, I am a mere layman; I am not a steamship 
operator. I am worse than that; I am a lawyer. But why should 
you gentlemen seek to avoid responsibility; why don’t you seek it? 
Why do you try to avoid service; why don’t you seek it and center 
it in ’ yourselves ? I think we ought to have that unified responsi¬ 
bility from the inland point to destination. If the shipment origi¬ 
nates at the ocean port I realize there may be complications of in¬ 
ternational law and some obstacles. 

Mr. Hardy. What you mean is, you want a definite understanding 
when you ship your goods as to where the obligation to you rests? 

Mr. Merriam. That is the idea. I realize, of course, there may 
be some steamboats in the line of the haul who never come into this 
country and are not subject even to the process of our courts. We 
may be subject to that limitation, but we ought to get it by treaty 
if we can not get it in any other way. But, in so far as the steam¬ 
boat companies come into our ports and are subject to the operation 
of our maritime law, they ought to be held to full responsibility for 
losses in these cases—and some particular company. The one Avho 
receives the shipment is the one, it seems to me, that ought to handle 
the claims and be held responsible for the Avhole transit over every 
line that is subject to the processes of our courts. 

Mr. Hardy. Are we not having the same difficulty to overcome 
in making the local shippers stand sponsor to the end of the ship¬ 
ment ? 

Mr. Merriam. You mean our local steamboat lines? 

Mr. Hardy. I understood you to say a man could go anywhere to 
the railroad in Germany and get a through bill of lading with the 
knowledge that the railroad would settle with him for the losses ? 

Mr. Merriam. My understanding of that is I think it Avas really 
a governmental supervision and cooperation that made possible 
what I spoke of. 

Mr. Hardy. HoAyeA^er it was done, that was the end obtained ? 

Mr. Merriam. Yes; and I believe it was pretty successfully ob¬ 
tained. That has been investigated by clients whom I represent, 
who have reported that to me as a fact, and I am inclined to think 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 277 


that is true. They traveled in Germany before the war and made 
an investigation of that. I believe, however, it was in large part 
due to very dose governmental supervision of things. I think gov¬ 
ernmental efficiency did it, and why could we not get governmental 
efficiency here. 

Mr. Hardy. We have an idea in this country that governmental 
efficiency is inefficiency, that there is no such thing as efficient Gov¬ 
ernment operation. 

Mr. Merriam. I do not feel that way about it. I think if Con¬ 
gress set itself to solve this problem of getting unified and responsible 
transportation and delivery of the goods from an inland point in 
the United States or a United States port to the ultimate foreign 
destination that it could achieve that purpose. 

Mr. Campbell. I am going to take a simple example. Under your 
plan you would repeal the third section of the Harter Act, which 
exempts the shipowner from liability for negligence in navigation, 
providing he exercised due diligence in making the steamer sea¬ 
worthy ? 

Mr. Merriam. Yes, sir. 

Mr. Campbell. In other words, you would impose upon the ship 
owner liability for a loss resulting from a negligent collision. That 
is what that paragraph protects him against. To that extent, for 
example, you would make the shipowner an insurer? 

Mr. Merriam. Yes, sir. 

Mr. Campbell. And you are willing to pay him for that insurance 
through an increased rate. He in turn would insure with the P. & I. 
club and let the P. & I. club put that insurance in. Now you, as a 
shipper, would not want to insure with an insurance company 
against the same risk, because if you did you would be paying two 
insurance premiums for the same loss. Now, then, export business 
is done to-day very largely through the banks. The documents that 
you require to finance your export shipments are, first, an invoice; 
second, a bill of lading; and, third, an insurance policy. Do you 
think that under your plan you would be able to induce your banks 
to finance your exports by substituting a bill of lading for the in¬ 
surance policy which to-day covers against negligence in naviga¬ 
tion ? Do you think it is a practical business matter ? 

Mr. Merriam. Yes, sir. 

Mr. Campbell. You think you could induce your banks to forego 
the insurance policy which they require to-day and to accept in sub¬ 
stitution therefor a bill of lading covering that risk? 

Mr. Merriam. Yes, sir. If you will give me the legislation which 
I have requested, I do think so. 

Mr. Campbell. Have you made any inquiry of the banks to de¬ 
termine that at all? 

Mr. Merriam. No, sir. 

Mr. Rush. Mr. Chairman and gentlemen, the statement made 
bv the attorney for the steamship owners carries with it a fallacy. 
There will be‘no necessity for having two insurance. premiums to 
pay on the same risk. The insurance company will issue a policy 
covering all the risks, which would include the case of a negligent 
collision such as Mr. Campbell suggests, and they would pay their 
policyholder for that loss and then, by subrogation to that policy¬ 
holder, would come back on the steamship owner. That was the 


278 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

situation precisely that existed prior to these recent court decisions; 
it is one which would be restored. It is existing now under limita¬ 
tions. And there would be no trouble about the shipper getting all 
the accommodation he wanted from the banks on such an insurance 
policy. It would not be necessary to do away with the insurance 
policy, because the rate charged for that insurance would be either 
nominal or none at all, because we would have the shipowner to go 
back on. 

Mr. Campbell. He says it is my fallacy. He says the insurance 
company would insure the risk and would not charge a premium for 
it. Did anybody ever hear of an insurance company doing that—in¬ 
suring a risk and not charging a premium for it? His overhead in 
writing insurance is involved and if he did not charge for that risk 
it would be a loss to him at least to that extent. 

Mr. Merriam. You do assume the shipowners would have to have 
an insurance company to carry the risk. That is an assumption. I 
do not know whether it is correct or not. 

In taking leave of the committee, I want to say this. It may seem 
a bit incredible, but I am really very conservative. I represent con¬ 
servative interests. I represent interests who maintain friendly rela¬ 
tions with carriers and practically never sue them. I have never be¬ 
fore, in representing my clients in any proceeding, asked for such 
fundamental changes as I have asked here to-day. At the export 
bill-of-lading hearing before the Interstate Commerce Commission, 
I was very much more conservative than the most conservative repre¬ 
sentative of the shipping interests. I accused the attorney for the 
National Industrial Traffic League of being a radical in that proceed¬ 
ing. The only reason I speak of these fundamental changes is because 
I have gone through a change of view on it myself in the actual con¬ 
tact with these things. I do not think your present system is going 
to work in building up our shipping; I think it has got to be changed 
and you have got to centralize this responsibility. I wish the sug¬ 
gestions could be considered and not thrown out as extreme. Pos¬ 
sibly our minds are going to come to it; but I believe ultimately we 
have to provide a responsibility for the handling on the ocean of our 
foreign exports that you have not got to-day and that I do not think 
you will get under this system. 

Mr. Edmonds. Without it was decided to have a through bill of lad¬ 
ing, it would not be possible with any degree of satisfaction to the 
shipper, do you think? 

Mr. Merriam. If you adopted these changes? 

Mr. Edmonds. If you had a change that would require them to 
accept equally the liability all along the line, the interchange of 
freight between the steamer and the railroad could be carried out on 
the through bill of lading, is not that so—just the same as you carry 
a shipment to-day on a dozen different railroads and divide up the 
liability between them? 

Mr. Merriam. That would be a matter of interline settlement. 

Mr. Edmonds. Unless this liability can be covered in some way or 
other, a through bill of lading would be almost impossible. You 
can say they shall take it on our railroads and put it on such and 
such a ship, but at ship’s tackle your liability stops. 

Mr. Merriam. Yes; in any event. If I understand your point, I 
think I agree with you fully. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 279 


Mr. Amberg. You will recall Mr. Englar referred to 12 letters 
that came m one day to our office disclaiming liability on the ground 
that notice of claim had not been given in time. I have here letters 
from the Steamship Owners’ Protection and Indemnity Association, 
all on behalf of the same steamship company, on shipments from 
JNew lork in midsummer last year disclaiming liability on the 
ground that the time for giving notice of the claim had’not been 
complied with. The amounts of the claims as mentioned in these 
letters are $2,227, $1,125, $1,712, $352, $89, $408, $356, $58, $51.27, $63, 
$1,865, $105, $2,700, $72, $1,467, $383, $252, $45, $1,507, and I might 
say that here is one of the claims of the Cleveland Worsted Mills, 
represented by J;he gentleman who testified yesterday. Here is a 
claim for $1,507, notice of claim not in time, and another one for 
$660. The amount does not appear in the last one. There are 21 of 
them that came in the mail from June 7 to June 10. 


Mr. Loines. Did those claims come to you through the under¬ 
writers ? 

Mr. Ambebg. They probably did. 

Mr. Loines. And they are matters on which premiums had been 
paid by various shippers ? 

Mr. Ambebg. Probably so; yes. 

Mr. Lehlbach. The committee will now hear from the representa¬ 
tives of the shipowners, and will request Mr. Campbell to designate 
who is to be heard and the order. 

Mr. Campbell. I would like to ask Mr. Imlay two questions over¬ 
night. I want to ask how long the Ward Line has been in business? 

Mr. Imlay. I am unable to answer that definitely, but I would 


sav a great many years. 

Mr. Campbell. You testified last night at considerable length about 
a system of watching and caretaking of the cargo, and I understand 
the impression was that that was an innovation—something new.. 
Now, I ask you how long that system to which you testified has been 
in vogue and in use by the Ward Line in its business? 

Mr. Imlay. I have been with the Ward Line going on 15 years, 
and that system was in use when I joined the company. 

Mr. Campbell. That is all. Now. I am going to ask the committee 
to hear Mr. Haul in, who is manager of the terminals, as T under¬ 
stand it, for the United American Lines engaged in European service. 
We heard last night from a man who was engaged in the West Indies 
service. 


STATEMENT OF MR. H. R. HANLIN, NEW YORK, N. Y., REPRE- 
SENTING UNITED AMERICAN LINES, EUROPEAN SERVICE. 

Mr. Hanlin. Mr. Chairman, I wish to explain to you and the 
gentlemen of the committee the system we have in effect, so far as 
the United American Lines is concerned, in the protection of cargo on 
the docks at New York. 

We have an organized police force, which is a company police 
force organized along the lines of a city police force. We have in 
charge of it a superintendent of police, who has lieutenants and 
roundsmen who are in charge of each tour of eight hours to a tour. 
Those roundsmen have charge of the patrolmen and the watchmen 
who take care of the cargo on the pier. 


280 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


The chief of the department and also his subordinate officials are 
experienced police officers. A number of them are pensioned city 
policemen who are familiar with the New York water front and 
also have a knowledge of the ways of the crooks and know a large 
number of them; that is, they have been associated with river robber¬ 
ies and water-front robberies in the city in the past. 

The patrolmen and watchmen, when they are employed, fill out 
applications giving their past record and their experience. Then 
we write to previous employers to give the steamship company their 
record and when last employed. These requests for their records 
are sent to different former employers. In addition to the written 
returns from former employers we have the applicants personally 
investigated by a representative of the company, as to their honesty, 
habits, etc. Quite a considerable number of these men, particularly 
the roundsmen, lieutenants, and patrolmen, are regularly appointed 
special city policemen. 

In addition to that we have men working on the docks who are not 
known to anyone excepting the superintendent of police, or, perhaps, 
to his lieutenants, checking up the operations of the different water¬ 
front employees who work on the docks. That includes the steve¬ 
dores, the tally men, truck drivers, public loaders, and other em¬ 
ployees about the docks, so that they can keep track of anyone who 
acts in a suspicious manner or who they find dickering with cargo, 
and who they report to the superintendent or his officers so that they 
can be taken from the docks and removed. 

In addition to this, city detectives frequently visit the docks and 
look over the employees with a view to seeing whether there are 
any questionable characters there, and if there are they notify us 
so that we can look out for them and watch them. We also have 
our own men furnished with a description of known water-front 
thieves and have them periodically look over the pictures in the 
rogues’ gallery for the known bad actors, as we call them. We also 
have our police department keep in close touch with the railroad 
police department superintendents and with the different branches 
of the city department, and also confer from time to time with the 
different city police departments as to any known conditions around 
the water fronts, in order to try to keep in touch with them to find out 
where they are and what they are doing. 

In case of the discovery of theft the guilty parties are arrested 
and prosecuted. We do not pass over any theft on account of influ¬ 
ence being brought to bear or for any reason whatever; in other 
words, if a man is caught stealing he is arrested and prosecuted. 

Mr. Campbell. What success do you have in that connection ? 

Mr. Hanlin. We have had very good success. In every arrest 
made we have gotten a conviction and, out of all the arrests and con¬ 
victions we have had, to my knowledge, four suspended sentences. 
In the other cases they have either been fined or sent to the workhouse. 

Mr. Campbell. In what class of your labor have you found most of 
the thefts to have been committed? 

Mr. Hanlin. I do not think by any one particular class. Taking 
it by the number of men employed, stevedores, truck drivers, truclS 
men on the docks, that is, outside truckmen over whom we have no 
control—taking them all in, I would say, according to the number 
of men employed of each class on the docks it will run pretty close 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 281 

to even. It seems to have been a practice in the last few years to 
accuse the stevedores of everything that was stolen; but we do not 
find that to be the case. We find it is pretty evenly divided. Of 
course, among the stevedores there are pretty bad actors that will 
work in from time to time, just the same as in any other class of 
men. When we find them, they are sent off of the docks and we get 
rid of them. Taken as a whole, I think the arrests will even up 
pretty well among all classes, including the railroad lighter captains, 
the different class of railroad employees that come to the docks, truck 
drivers, truckmen, and general stevedore labor, and so on. 1 do not 
think you can accuse any one particular class of being any worse than 
the other in cases of stealing. 

I he small pilferage we watch very closely, and if any suspicion 
attaches to a party which appears to be well founded, and even in 
cases where we can not get sufficient on them to make arrests, we ask 
the party in charge of the particular department to keep them off 
the docks so that we won’t have to take any chances on them. 

So far as arrests are concerned, during the year 1920 we made ap¬ 
proximately 45 to 50 arrests, in all of which we secured convictions. 
During the year 1921 to date, we have made, to the best of my recol¬ 
lection, two arrests, indicating that the conditions are much better 
now and that there is a much better class of men working around the 
docks and around the water front than there were a year ago. 

Mr. Campbell. Have you the opportunity to make a better selec¬ 
tion of your men to-dav than you had before ? 

Mr. Hanlin. Yes; I think we can make a very much better se¬ 
lection. I think the same applies to the railroads and others, on 
account of the dropping off in business and picking up new labor 
from many different sources, and by employing men who have been 
trained. The railroad companies have better men; the old men 
who went to w r ar were taken back into the service, men who were 
trained and tried in a particular service. We have found that true, 
particularly in the railroad companies, and now their men are 
mostly what are called “ old-timers.” The same thing is true 
around the water front; we got rid of a lot of fellows who only 
cared to work when v r ages were high and they could make big 
money and picked up as side money what they could get otherwise. 

Mr. Edmonds. Have the arrests become any less this year? 

Mr. Hanlin. Yes, sir. Last year we had between 45 and 50; and, 
to the best of my recollection, to date this year we have had only 2. 

Mr. Hardy. Does this pilfering apply to the foreign vessels enter¬ 
ing and departing from our ports as much as it does in the case of 
our domestic vessels? 

Mr. Hanlin. I could not answer that personally, but from the 
information I have received I think it does. That is the impression 
I have from general conversation. 

Mr. Hardy. Do the foreign vessels limit their liability the same 
as the American vessels do? 

Mr. Hanltn. I am not qualified to answer on that: I do not 
handle that end of the business. I handle the physical operation 
of the piers and the loading and discharging. 

Mr. Edmonds. I think, Mr. Hardy, from what was testified here 
yesterday, that the bills of lading of the foreign lines plying out 
of New "York, probably under a conference agreement, carry the 


282 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

same liability limitations as the American bills of lading. Y\ 
have not copies of all of them, but we have a lot of the bills of lading 
here arid they look that way. 

Mr. Hardy. The reason I ask is simply this: If we are going to 
build up a merchant marine we must give the American shipper 
just as much facilities in the American ship as he can get by the 
foreign ship. If you do not he will ship by the foreign ship. 

Mr. Edmonds. There is probably a conference agreement on the 
limitation of liability. 

Mr. Hickox. No, sir; you are in error about that. It has been so 
longer than I have any recollection. 

Mr. Edmonds. Did not your railroad friend make the bill of lad¬ 
ing that I asked about yesterday ? 

Mr. Hickox. No ; it was used before his day. 

Mr. Campbell. Proceed with your statement, Mr. Hanlin. 

Mr. Hanlin. As a matter of information for the committee, our 
police pay roll of this particular company that I represent from 
August 1, last year, to July 1, of this year, for 11 months, which takes 
in the consolidated companies, has amounted to $184,000, which we 
have paid for the protection of cargo. That is the pay roll alone. 
Outside of that there were, of course, some incidental expenses that 
went for prosecutions and other miscellaneous matters. 

Mr. Loines. That is for watchmen largely, is it not ? 

Mr. Hanlin. Yes, sir; watchmen. We call them policemen; they 
are watchmen and policemen. 

As to the handling of cargo- 

Mr. Kirkpatrick. Before you get to that—how are these guards 
armed ? i 

Mr. Hanlin. A portion of them are armed with guns; that is, we 
have a certain number on each tour on each pier that are equipped 
with guns and night sticks. Others are not armed, except with the 
stick. In other words, we do not feel it is necessary to arm all of 
them, but we keep a few on each tour of duty armed and all the 
head men, the roundsmen, and lieutenants—the armed men—have 
city police authority. 

Mr. Kirkpatrick. Are they there night and day? 

Mr. Hanlin. They are there 24 hours a day. 

Mr. Kirkpatrick. How are they divided into watches? 

Mr. Hanlin. They are divided into three watches of eight hours 
each, and the docks are stationed off. In other words, take a pier 
1,000 feet long, we establish so many posts on the pier, and men. are 
assigned to those posts. During the working hours, say, from 7 to 5, 
we will have a greater number of men on duty than we have after 
5 o’clock in the afternoon, on account of the larger number of 
people passing to and from the docks, when there are the truckmen 
that have to be taken care of. Then, when the docks close at night, the 
doors are closed and then we have a less number of men, because they 
are not interfered with and can keep a better watch of the cargo. 
At night the doors are all closed and locked, except the fire doors, 
and the fire doors are guarded. The other doors are locked from the 
inside and can not be opened from the outside, and the fire doors 
are guarded, so that anybody passing in and out can be watched. 

In addition to that, any person leaving the pier, either day or 
night, including the workmen coming off the pier after they are 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 283 


through work, are looked over by policemen stationed at the gates 
to see that they are not carrying anything out that does not belong 
to them. Policemen are stationed on each side of the door as the 
men go out, an officer or two officers on each side of the door, and 
they look the men over as they file out to see that they are not 
carrying any packages. The customhouse guards, as a rule, line up 
with our police officers and help to make the inspection. 

In receiving cargo, I will treat first of the special cargo, which is 
cargo more liable to pilferage than ordinary general cargo. 

Mr. Edmonds. By “ cargo coming in. ” you mean that is the cargo 
you are receiving from foreign ports? 

Mr. Hanlin. No, sir: by receiving cargo I mean cargo for outward 
shipment. We call “ outward ” receiving and “ inward ” delivery. 
In receiving cargo, anything of a special nature, that is more liable 
to pilferage, such as valuable cargo, is checked from the trucks by a 
checking clerk or tallyman and turned over to an officer, who is called 
a special cargo man. The piers are equipped with lockers and the 
special valuable cargo is put in these lockers along the pier by the 
officer who signs for it. 

Mr. Campbell,. What do you include in special cargo—hosiery? 

Mr. Hanlin. Say, for instance, silk hosiery, lace, furs, silverware, 
lead pencils- 

Mr. Kirkpatrick. Shoes? 

Mr. Hanlin. Shoes—anything that is particularly susceptible to 
pilferage. That is placed under guard in these special lockers and 
the man in charge of it is held responsible for it. He is responsible 
for it until he delivers it to the ship or to the receiving clerk for 
the ship and takes his receipt for it. In case we have a valuable 
cargo, such as pig tin or pig lead, which we can not get in the special- 
cargo locker on account of it being so bulky and weighty that the 
piers would not stand it, that is checked by the police officer, who 
signs a receipt for the number of pieces. When that is taken out of 
his care he is given a receipt for the number of pieces taken out each 
time any of it is taken out, and when he is relieved by the next man 
they sign to each other for it all the way through until the cargo 
is finally dispatched. That cargo, after being taken from the special 
cargo locker, is transferred to the ship and is checked to the chief 
officer of the ship, who signs a receipt to the dock department for the 
special cargo. In delivering it on the other side he takes a receipt 
from the dock department or whoever takes responsibility for it on 
the other side. 

Mr. Kirkpatrick. Is that special cargo stowed in a particular 
section of the ship ? 

Mr. Hanlin. Special cargo, valuable cargo, is stowed, as far as 
possible, in special lockers on the ship. At times, however, we have 
more of what we call special cargo than can be stowed in the lockers. 
In that case we figure on placing it somewhere in some particular 
place in the ship under the charge of the chief officer, who designates 
the place, and other cargo that is not so susceptible to pilferage is 
piled around it so that it is covered over with other cargo in order to 
prevent any person from getting in there and opening the boxes 
and getting away with it. In other words, if we get more than we 
can get in the lockers it is protected by being piled around with other 
ordinary general cargo. 


284 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

The precautions which I have enumerated apply to the handling 
of special cargo both inward and outward. 

In the case of the other general cargo, which is not considered v 
as particularly valuable, in the case of the receiving cargo, it, is 
placed on the docks in charge of watchmen—that is, one watchman 
may have a certain section of that; he may have a hundred different 
packages representing 100 small shipments. We do not take a receipt 
from him for that, because there is so much of it, but it is placed 
there in his care, and he keeps patrolling backward and forward,, 
watching it during the time it is on the dock, so that it is not given 
the same protection as to the inclusion of a receipt as special valuable 
cargo. 

On the inland cargo, coming from the other side, the same pro¬ 
cedure is followed out. The chief officer signs for it at the other side, 
and on arrival at New York he turns it over to the dock department, 
who give him a receipt for it. It is checked out of the ship and 
the dock department receipts for it, they in turn placing it in a, 
special-cargo locker and placing an officer in charge of it, who has 
charge of that particular locker. It remains in his charge until 
the delivery is made to the consignee, when he is relieved of his 
responsibility, of course, by the receipt of the delivery clerk, who 
in turn takes a receipt from the consignee’s driver or whoever takes 
delivery. 

The inland cargo from the ships, the general cargo, is handled the 
same as the outward general cargo; a watchman is placed in charge 
of it from the time it comes on to the dock until it leaves the dock. 
The cargo being delivered to the consignee’s trucks is checked on to 
the trucks by a tally clerk and a receipt is taken for it. 

Mr. Kirkpatrick. From whom? 

Mr. Hanlin. From the driver or whoever is authorized to sign 
for the consignee. That truck is again stopped at the gate to the 
pier, where it leaves the pier, and is rechecked by a representative 
of the police department against the number of packages the truck 
is supposed to have on. In other words, the tally clerk or dock 
man gives the policeman at the gate a sheet showing the number 
of packages this truck is supposed to have on it, and that is checked 
at the gate by a representative of the police department to see that 
the truckman has not picked up an extra package on the way up 
the dock. 

Mr. Edmonds. Who checks the condition of them ? 

Mr. Hanlin. That is done by the tally clerk. 

Mr. Edmonds. Hoes he note that on his check? 

Mr. Hanlin. Yes, sir. And the police representative also notes 
the condition of the packages and makes a report to his superin¬ 
tendent, a copy of which goes to the claim department, showing the 
condition of the packages delivered in case anything goes wrong. 

Mr. Edmonds. Let me ask you: Do you deliver to the consignee, or 
is that done by his own teamster? 

Mr. Hanlin. We do not make delivery to the consignee. That is 
handled by his own teamster or some contract truckman. 

Mr. Edmonds. You do not have any arrangement with a subsidiary 
company for that? 

Mr. Hanlin. No, sir; we are through with the cargo when it is 
loaded on the truck at the dock. In other words, we are through 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 285 

with it when the truck comes, because the consignee has his own 
drivers or outside truckers load it on the truck for him, and we take 
a receipt for it when it is loaded on the truck. 

Mr. Campbell. If you have noted any damage to the packages, 
is that fact noted on the receipt which }mu take from the truckman ? 

Mr. Hanlin. If there are any defects noted in the packages, the 
truckman may make a notation on his receipt to show it. 

Mr. Campbell. Does he receive a copy of that receipt for de¬ 
livery to his employer? 

Mr. Hanlin. Yes. He would receive a copy, so that he would 
know what the notations were. 

Mr. Edmonds. Suppose it is the case of an oil stain ? 

Mr. Hanlin. In the case of an oil stain, where the cargo is likely 
to be damaged, as it is very likely to be. mention is made of that. 
In other words, an oil stain made on a box. which may prove the 
subject of damage, is indicated by the truckman making a notation 
of that fact. 

Mr. Campbell. Have you during the past few years, during the 
war and since, been able to control the employment of truckers and 
truck loaders? 

Mr. Hanlin. No; not of the truckers and truck loaders. In fact, 
you had not a great deal of control over any particular class of 
labor during the war. 

Mr. Campbell. In whose employ have the truck loaders been? 

Mr. Hanlin. The truck loaders are what we call public loaders. 
They make an agreement with the different shippers and consignees 
for the loading of their trucks; that is, they have regular estab¬ 
lished rates. It is simply an outside proposition. 

Mr. Hardy. Suppose you have a careless truckman receiving 
goods for the consignee and the goods were damaged but no note 
made of the damage in the receipt of the papers that are given to 
him. and he fails to note it, and signs for them, and takes them in 
that shape without an}^ memorandum showing the damage. Is not 
the ship company by that neglect rather freed from any claim for 
damages ? 

Mr. Hanlin. I could not answer that question. I do not know 
just how the claim department would handle that. I rather think 
I am not qualified to answer that particular question. 

Mr. Hardy. So far as the shipper is concerned, the necessity of 
those notations is a very essential thing, is it not? 

Mr. Hanlin. Yes; it is. 

Mr. Hardy. Because if your ship company can get by with a clear 
receipt and without any note of the truck loader, who is the agent 
of the consignee, they have avoided any liability ? 

Mr. Hanlin. Yes'; that may be. I do not know just how that 
would be handled, as that has not come to my notice. 

Mr. Hardy. Suppose there should be a package with part of it 
taken out, broken and gone, which might subject your ship company 
to a claim for loss, but there was no note made of that damaged con¬ 
dition of the package or that loss in any of the papers until it got 
onto the wagon of the truckman and he discovers it, perhaps, when 
he is on his way to his employer, the consignee; you have a clear 
case of loss when the consignee loads it, but there is no evidence fix¬ 
ing any liability on the ship company, is there? 


286 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Hanlin. As I say, I am not qualified to answer how that 
would be handled. 

Mr. Laws. Suppose there was an odor from a package of woolens 
from fish oil, for instance, and probably the truckman is an illiterate 
man; that would not be noted, would it, an odor in the event of wool 
being stowed in a compartment with fish oil ? The truckman would 
not know anything about whether that was a proper odor or not, 
and that would not be noted on the receipt, would it? 

Mr. Hanlin. I do not know whether the truckman would know 
or not. 

Mr. Laws. The chances are he would not know anything about it, 
aren’t they ? 

Mr. Hanlin. I do not know. It would depend on whether he was 
accustomed to handling that particular class of goods and on what 
instructions he had from his employers. You will find those fellows, 
as a rule, are pretty careful. 

Mr. Laws. If it was not noted there would be no way of knowing 
it until the consignee got the goods and found the fish oil odor, 
would there ? 

Mr. Hanlin. If there was not any notation? 

Mr. Laws. Yes. 

Mr. Hanlin. No. 

Mr. Laws. Suppose it was something covered with burlap and the 
package contained something which had been damaged by water, 
but the burlap had dried out, as it does in many instances: Would 
there be any notation of that? 

Mr. Hanlin. I do not suppose there would if it was not notice¬ 
able. 

In addition to the checking of the trucks, in order to avoid unde¬ 
sirable characters from getting on the piers we require all parties 
to have a pass to go onto the pier. In other words, to avoid strangers 
getting on who have no business there and are likely to interfere 
with the cargo, we require all parties to have a pass from a company 
officer—some of the officials of the traffic department—identifying 
the parties who go on the pier. Also, in loading cargo and discharg¬ 
ing, we place watchmen in each hatch where cargo is subject to pil¬ 
ferage to watch the loading and discharging and to make a note of 
any pilfering or damage that occurs to the cargo. That practice is 
carried out on all cargo that may be subject to pilferage. Of course, 
on the bulk cargo, which is not subject to pilferage, we would not 
do that. 

We have an arrangement also on our ships, both loading and dis¬ 
charging, that the hatches are inspected by the chief officer of the 
ship or one of his subordinate officers, and also by a representative 
of the police department, immediately the hatches are opened on a 
discharging ship and the last thing before they are closed on the load¬ 
ing ship, and the two of them certify to the condition of the cargo. 
That is for the purpose of locating the responsibility in case the 
cargo should arrive at the next port in a damaged condition. We 
have found that has had a very good effect and has placed the 
responsibility directly on the ship’s officers for the protection of its 
cargo during the trip. 

As far as losses are concerned, one thing that should be taken into 
consideration is the opportunity for losses from lighters prior to 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 287 

delivery, after leaving the railroads and prior to delivery to the 
steamship company where concealed losses may occur. A lighter 
would perhaps be around the harbor from 24 to 36 hours from the 
time the cargo is discharged from the railroad until its arrival at 
the steamship pier. Considerable occurs in that time. The lighter 
may be left entirely unprotected by the lighter captain, giving the 
opportunity for substitution there that comes in as a concealed loss. 

In discussing that matter with a representative of one of the rail¬ 
roads a few days ago, he told me they had had two cases in the last 
30 days where the lighter which was tied up to some dock at the 
port of New York during the night had been taken away during 
the night and returned before the next day. His impression was 
that those lighters were used at night for the removal of cargo from 
lighters in the harbor or for contraband service; but it shows the 
opportunity there is for pilfering and to get away with the cargo 
from the time it leaves the railroad until it is delivered to the steam¬ 
ship company. 

Mr. Campbell. Are those lighters at all in the custody and control 
of the steamship companies? 

Mr. Hanlin. No, sir; they are not under our control. 

Mr. Campbell. Whose lighters are they as a rule; city lighters ? 

Mr. Hanlin. They belong to the railroads or to a private lighter¬ 
age company; but the larger portion of our cargo is delivered by 
railroad lighters. 

Mr. Campbell. In what other way do these thefts occur? 

Mr. Hanlin. Well, quite a number occur through trucks loaded 
with cargo being left at stables or in lots during the night. Ship¬ 
ment is made during the day, but on account of not getting away 
from the warehouse in time to make delivery, the truck will be tied 
up perhaps at a stable during the night and delivery made the fol¬ 
lowing day. I recall one particular case of a truck coming to one of 
our piers that was supposed to have a shipment, I think of woolens 
or stockings, or something of that kind—I do not recall the particular 
cargo—and as the truckman brought it in we noticed something did 
not look just right. We opened it up and found the contents had 
been removed and the box filled up with stable refuse, indicating 
that the goods had been taken out during the night and the refuse 
put in the box instead. 

We had another case of the delivery of a number of cases of 
whisky. They were in bond and when discharging from the truck 
one of our receiving clerks noticed they were apparently light. An 
examination was made by the customs officer and the shippers and 
we found the cases partially filled with empty seltzer bottles, news¬ 
papers, and articles of that lnnd. The whisky bottles had been taken 
out and other articles substituted. 

We had another case of a shipment of gloves that came from Ger¬ 
many. After the consignee received the goods he wrote us there 
were no gloves in it. We had an investigation made and found the 
cases had been emptied of their original contents and filled with elec¬ 
tric insulators and newspapers, and the investigation disclosed those 
insulators were not made in the United States, but were a German 
product—showing they had been substituted on the other side before 
they got to the steamship pier at all. 


288 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Campbell. Where do your lines operate? 

Mr. Hanlin. They operate from New York to Hamburg and to 
the Hutch East Indies, and also from Baltimore and Philadelphia t-o 
Hamburg. 

Mr. Campbell. Do they run intercoastal ? 

Mr. Hanlin. Yes, sir; they run intercoastal to the west coast of 
the United States. 

Mr. Campbell. You are the successor to the old American-Ha- 
waiian Steamship Line ? 

Mr. Hanlin. Successor to the American-Hawaiian Line; yes, sir. 

Mr. Campbell. In those ports where your steamers call, how is the 
cargo delivered at the ports; when does your liability terminate ? 

Mr. Hanlin. At some of the ports it is on placing the cargo on the 
dock; at other ports it is on delivery to the consignee. It depends on 
the practice of the port. 

Mr. Campbell. Is there anything you do not do for the safeguard¬ 
ing of this cargo that you could do ? 

Mr. Hanlin. We have figured on everything we could to in every 
way give protection to the cargo, and our dock people and our police 
department are all impressed with the importance of watching it 
carefully to prevent pilfering, not alone because of the question of 
claims, but also because of the bad name it gives the company. 

Mr. Campbell. From what sources do you obtain your labor supply 
for all classes of your labor? 

Mr. Hanlin. 1 do not just understand what you mean. 

Mr. Campbell. I may say to the committee I am asking that ques¬ 
tion with this thing in mind, that the class of labor that these com¬ 
panies emplo}q whether engaged in this trade lie is in or in the Cuban 
trade, so far as New York is concerned, all comes from the same 
source. Is that right ? 

Mr. Hanlin. It all comes from the same source. 

Mr. Campbell. The chairman was not here last night when I 
called attention to the difference in thefts in the South American and 
the Cuban trades as compared with the European trade, as evidenced 
by the insurance rates. It seems to be conclusively proved that the 
great bulk of these thefts are not to be charged to the American 
laborers, but is due to the condition that exists in various South 
American countries. 

Mr. Hanlin. It all comes from the same source. • 

Mr. Kirkpatrick. Your testimony and that of Mr. Imlay estab¬ 
lishes the fact that there are at least two lines that take very thorough 
care of the cargoes. What can you say about the precautions and 
care taken by other lines that have come Avithin your own notice ? 

Mr. Hanlin. The lines that have come within my notice, as far as 
I know, take practically the same precautions. 

Mr. Kirkpatrick. Do you know of any that take a lesser degree of 
care? 

Mr. Hanlin. No ; I can not say that I do, because there are very 
few of the lines that I have discussed the thing with. 

Mr. Kirkpatrick. Do you know of a number of others that do take 
the same precautions? 

Mr. Hanlin. I know of some others; yes. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 289 

Mr. Kirkpatrick. \ou do not know of any that are more careless 
than you are ? 

Mr. Hanlin. More careless ? [Laughter.] 

Mr. Kirkpatrick. Yes. 

Mr. Hanlin. That is a hard question to answer. 

Mr. Kirkpatrick. Or less careful; I will put it that way. 

Mr. Hanlin. I do not know enough about their details to pass on 

iiiat. 

Mr. Kirkpatrick. You do not know of any lines that are less care¬ 
ful of their goods than you are, do you ? 

Mr. Hanlin. I can not say that I do, because I am not familiar 
with their details of operation. 

Mr. Laws. What results have you gotten from this care in the 
way of reducing pilferage losses? 

Mr. Hanlin. We have gotten good results. 

Mr. Laws. Do you make any additional charge in the freight rate 
for giving the shippers this additional care ? 

Mr. Hanlin. That is a matter that would have to be answered by 
the traffic man. Our operations are divided between the physical 
handling of the cargo and traffic. Our people know there are cer¬ 
tain classes of cargo, which they use special care on, which are sub¬ 
ject to pilferage. Whether they get additional rates on that I am 
not qualified to answer. 

Mr. Laws. But as a result of the care you take, you get good 
results, and the pilferage losses are reduced very materially, are 
they not? 

Mr. Hanlin. We feel they are. We feel if we did not take the 
precautions we do to-day that our losses would be very much greater. 
It is not a new thing; ever since we have been operating it has been 
handled in the same way. 

Mr. Laws. Are you willing to pass on the question as to whether 
or not your line would be willing to have a bill of lading issued 
omitting the exemptions from liability and as to the amount of 
liability, and from all these other exemptions, for a proper rate of 
freight, of course? 

Mr. Hanlin. That would not come under my department. 

Mr. Laws. That would not come under your department ? 

Mr. Hanlin. I would have nothing to do with the freight rate. 

Mr. Laws. You would not want to pass on that? 

Mr. Hanlin. I would not; it is entirely out of my department. 

Mr. Laws. As to these other lines, as regards the precautions 
taken, you would not undertake to say what lines they were or what 
precautions were taken on any other lines? 

Mr. Hanlin. I would not be competent to say as to that, because 
I do not know anything about the details except from general dis¬ 
cussion. They may do things which we do not do and we may do 
things which they do not do; I do not know. 

Mr.- Laws. Thank you very much, sir. 

Mr. Lehlbach. The committee would now be^ very glad to hear 
from Commissioner O'Connor, a member of the Shipping Board, on 
the subject of these losses. 

60683—21 - 19 


290 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


STATEMENT OF HON. T. V. O’CONNOR, COMMISSIONER, UNITED 
STATES SHIPPING BOARD. 

Commissioner O’Connor. There are a few things I would like to 
ask the steamship men. Should not there be some law passed, when 
you are passing this bill, to make the truck delivering companies 
responsible from the time they get the goods on board of the truck 
until they deliver to the ship? 

Mr. Campbell. Congress has the power under the Constitution to 
legislate with respect to interstate and foreign shipments. My judg¬ 
ment would be that would be one thing in the case of foreign ship¬ 
ments on which Congress can legislate to advantage. 

Commissioner O’Connor. I found in my experience on the water 
front there is a great deal of stealing done on the truck from the 
time it is put on the truck, at the delivery point, until it gets to the 
steamship. 

Mr. Campbell. We find so, too. 

Commissioner O’Connor. And many times you have taken empty 
boxes across, as this gentleman has said, filled with almost anything 
you can think of and with the original contents gone. If that can be 
brought about, I think it will make a big difference in the stealing. 

Mr. Campbell. I think it would be a very great opportunity myself 
for Congress to put upon the books criminal statutes which will cure 
this situation very materially. 

Commissioner O’Connor. This gentleman just mentioned the con¬ 
victions he had. I maintain where they get convictions that a sen¬ 
tence of 10 days or 20 days is not sufficient to cover the crime com¬ 
mitted; that it ought to come under the United States law with a 
maximum sentence, and if a few of them got a good, heavy sentence, 
a,very stiff sentence, a lot of it would be stopped. 

Then, the next thing is to get the “ fence ” that is handling this 
stuff at the water front. They are the people who are responsible 
for a big part of the thing. They take those goods from the man at 
iittle or no cost and get rid of them for big money. If there is any 
way you can make that a misdemeanor or something, and make it 
jnprofitable for the man buying those goods and make him amenable 
to the law, you would accomplish something. There is not 1 in 
20 at the present time that has anything done with him. It gets to a 
certain point and all the lawyers and attorneys you have got can not 
get beyond that point; and if you can make the fence amenable to 
the law in the same way, I think it will be a big thing. 

Mr. Campbell. Congress can do it, and you are getting at the 
remedy for the first time before this committee. 

Commissioner O’Connor. I am not getting at it. I think the 
American Line and many of the lines will tell you I outlined a plan 
and told them to get ex-policemen and ex-firemen on their pay rolls 
to watch those things years ago. My reason for that, for getting that 
class of men, was that we would have a class of men who were re¬ 
sponsible to the city for their pensions and they were going to see 
that those pensions were safeguarded and would carry out their 
duty. I know of many cases where they have robbed ’30 boxes of 
sugar and taken them off the pier in one night, and where $30,000 
of furs were taken off the pier in one night: and it could not be done 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 291 

without the cooperation of somebody that had charge of the pier. 
I do not think there is any question about that. They could not have 
carried away 30 boxes of sugar in one night without somebody on 
the pier cooperating with them, and if the companies would employ 
the right personnel, that is one of the biggest things, and these com¬ 
panies have not been employing the right personnel in watching their 
goods. 

Mr. Campbell. Have you any criticism to make of the United 
American Line? 

Commissioner O’Connor. No; and no criticism to make of the 
Ward Line and the Italian Line. They have all followed that 
policy. 

Mr. Lelilbach. Those persons on the pier who necessarily must 
connive with the men removing the goods in large quantities, such 
as you have stated—30 boxes of sugar, etc.—are employees of the 
steamship companies ? 

Commissioner O’Connor. They must he. They could never get 
away with it if they were not in connivance with them. 

Mr. Lehlbach. And pilferage from the piers to any extensive de¬ 
gree could not be done without the connivance of the steamship com¬ 
pany’s employees? 

Commissioner O’Connor. Without the connivance of some of them. 
Some of them in charge let the stuff get away and forget about it. 
If the steamship companies would follow that thing up in their per¬ 
sonnel and try to get this Congress to enact a law to hold the truck 
companies responsible for the stuff, I think that a great deal would 
be done to overcome a lot of this stealing. Ninety-eight per cent of 
the men working for the steamship companies do not want this stuff 
to go out. I can say to you we have had several strikes in the port of 
Buffalo or the port of New York in the last year, where the men 
simply refused to go to work and would not give you a reason except 
they would tell you they were u not going to work with this man.” 
Have not some of your steamship companies had that happen, where 
the men have taken the position they absolutely are “ not going to 
work with that man,” and would not tell you why, but you got rid 
of that man and he was the fellow who had been doing the stealing 
althought you could not get anything on him ? 

Mr. Hanlin. We have had cases where we were sufficiently certain 
to make the man not desired. 

Commissioner O’Connor. There are a good many companies that 
have had that happen. That has been the agitation that has kept 
going on with the organization officers for a number of years, be¬ 
cause it was making thieves out of 24 men where only one man would 
be doing the stealing. 

Mr. Lehlbach. Will you state for the record what connection you 
have had with labor in the past, in dealing with the steamship com¬ 
panies? 

Commissioner O’Connor. In what way. 

Mr. Lehlbach. Were you the president of any labor organization 
dealing with steamship companies? 

Commissioner O’Connor. I was president of the International 
Longshoremen’s Union, and I want to say I worked in harmony with 
almost every steamship company in the country. 


292 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Edmonds. Is the International Longshoremen’s Union strictly 
an American organization, or do you take in any foreign organiza¬ 
tions ? 

Commissioner O’Connor. It takes in Canada and our possessions. 

Mr. Edmonds. Canada, the United States, and our possessions ? 

Commissioner O’Connor. Yes. 

Mr. Kirkpatrick. Do you know whether or not other companies 
follow the precautions that these men have testified to, but who are 
not up to their standard? 

Commissioner O’Connor. I know of a company that came to me 
one day and wanted to know what to do. They had lost a lot of 
goods. I said, “Who have you watching your goods?” They said, 
“We have a certain detective agency watching them.” I said, “ Watch 
the men working for that company,” and the next day they got three 
of the detectives. 

They have not done that to the same extent with some of the smaller 
companies we have had operating in the last two or three years. The 
big companies have done everything they could to overcome this. 
This gentleman expressed it correctly when he told you they had not 
been able to select their men since the war. When you figure that 
during the war we lost 38,000 of our men to go across the seas, and 
had to pick up button sewers and everything else to fill in on the piers, 
you can get some idea of that. But the men now are getting back and 
I think you will find the situation a great deal better in the future. 
But whatever you do, if you can do it, make the law so strict that it 
means a good stiff sentence every time they get caught and send them 
to the United States court. There is no use sending them to the city 
courts, because 99 out of every 100 are turned loose. I can cite you 
one instance of the Bush Terminals where they caught a man going 
out. I suppose he must have had 150 pounds of property stretched 
around his body. He fell down with the property and could not get 
up with the load. [Laughter.] They took him into the police court 
of the city of Brooklyn and the judge there, after several weeks’ de¬ 
lay, decided the man had not taken anything off the company’s prop¬ 
erty—that he had not got off their property with it—and discharged 
him. [Laughter.] 

Mr. Laws. Somebody had seen the judge in the meantime? 

Commissioner O’Connor. Somebody had seen the judge in the mean¬ 
time; there is no question about that. Every man who is arrested, 
they have all kinds of power and influence with the city judges, and 
if you can get this into the United States court you will make a lot 
of thieves you have now know they are going to get soaked and they 
will quit it. 

Mr. Laws. I do not believe you would be able to do that in the 
case of a local shipment, but you might possibly do it in the case 
of an interstate shipment. You might make a Federal statute in 
the case of an interstate shipment, but in the case of a local shipment, 
where it would be a local crime, it would probably have to fall in the 
local criminal court. 

Commissioner O’Connor. Is it not all interstate shipment; does it 
not all come from some other State into New York or is intended for 
interstate shipment from New York, and the minute the stuff manu¬ 
factured in New York gets on the truck to go to the pier is it not 
part of an interstate shipment? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 293 

Mr. Laws. That is interstate. In the case of interstate shipments 
you can do it. 

Mr. Campbell. And foreign, also. 

Mr. Laws. Yes; foreign, also. 

Mr. Lehlbach. .Can riot the Federal statutes make the theft of 
property from interstate commerce, from the possession of the car¬ 
rier, a Federal crime? 

Commissioner O’Connor. They do it on the railroads. 

Mr. Laws. I do not know enough about criminal law to say; I am 
really not up on that. 

Mr. Lehlbach. I happen to know as a fact that is so. 

Commissioner O’Connor. That has been done on the railroads and 
it has made a great deal of difference. They get four or five years for 
the crime instead of 10 days. 

Mr. Ldmonds. If that is true of our interstate-commerce jurisdic¬ 
tion, why should not these cases be brought in the United States 
court ? 

Mr. Lehlbach. There is no statute making it a Federal crime as 
yet. 

Mr. Edmonds. There must be in connection with the railroads. 

Mr. Lehlbach. There is; and they bring those cases in the Federal 
courts with regard to the breaking into freight cars. 

Mr. Edmonds. Why did they not bring that case of stealing at the 
Bush Terminal in the United States court? 

Mr. Lehlbach. Because the act does not cover that. 

Mr. Campbell. That would probably be because the men have 
gotten into cars of interstate and foreign commerce, which was a 
crime that act fitted. Moreover, as testified by Mr. Imlay last night, 
they have had in our port United States district attorneys up there 
who have required absolute proof before they will submit their cases 
to the grand jury—proof which it was impossible to produce. An¬ 
other thing which exists in the situation which is coming before 
Congress is that the United States district courts of New York are 
way, way behind in their work. The Government alone has pend¬ 
ing in the district court of New York over a thousand admiralty 
cases awaiting trial. You could not bring a case to trial within a 
year to a year and a half or two years to-day in New York, and they 
are down here to Congress begging for the appointment of two more 
judges and can not get them. 

Mr. Edmonds. Bring your stuff over to Philadelphia and we will 
give you justice. 

Mr. Laws. We are way behind in Philadelphia, too. 

Mr. Edmonds. Sh ! Sh ! Don’t tell them that; you want to praise 
Philadelphia. [Laughter.] 

Mr. Laws. You want more judges there. 

Mr. Campbell. Is not my statement true, Mr. Laws, as to the con¬ 
ditions ? 

Mr. Laws. Absolutely; and we want more judges in Philadelphia; 
we can not get our cases tried in Philadelphia to-day. 

Mr. Hanltn. In addition to the precautions we take, we also 
have an arrangement under which we pay a bonus to the members 
of our police force in the case of convictions for pilferage. In other 
words, it is just a small bonus to make them more active and keep 
them a little more alert, if possible. 


294 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Edmonds. I can see now why you got convictions and the Ward 
Line did not. 

Mr. Hanlin. It is our own police forpe; not the city police force. 

Mr. Edmonds. They have their own police force, too. 

Mr. Campbell. Now, Mr. Chairman, you have rather deterred me 
from putting on any more witnesses by suggesting I am taking too 
much time, and I do not know what to do. I want to lay the facts 
before you and I can not do it except by calling witnesses. 

Mr. Lehlbach. Proceed. Who will you call next ? 

Mr. Campbell. I would like to hear from Mr. Guilford, of the 
International Mercantile Marine Co. 

STATEMENT OF ME. E. S. GUILFORD, NEW YORK, N. Y., MANAGER 

OF THE WESTBOUND FREIGHT AND CLAIMS DEPARTMENT, 

INTERNATIONAL MERCANTILE MARINE CO. 

Mr. Guilford. I am manager of the westbound freight and claims 
department of the International Mercantile Marine Co. 

Mr. Chairman and gentlemen of the committee, I think that the 
operations in regard to the watching of cargo on the dock have been 
very fully explained by Mr. Imlay and by the representative of the 
United American Line, and our system is very similar, except that we 
employ a detective agency rather than handling our own men. I think 
the result is quite as good, however, and we have full supervision of all 
the men working on the piers. The conditions have greatly improved 
during 1921, as compared with the previous years, and we feel that 
the enormous pilferages which did occur during the period from 1914 
up to 1920 were due entirely to abnormal conditions, to labor troubles 
and strikes, and that from now on we can hope for great improvement. 

During the year 1920, our cost for watching cargo on the piers, 
both the piers we operate in the Chelsea district, amounted to ap¬ 
proximately $440,000, and that is a very heavy tax on our operating 
expenses. It figures up between 50 cents and $1 a ton to watch and 
tally our cargo, and that, of course, is greatly in excess of the cost 
in prewar years. 

Special cargo is handled very much the same as described by the 
Ward Line and by the United American Line, and we have recently 
been able to get better cooperation on the part of ships’ officers, due 
also to labor conditions, and all in all we feel that we are doing every¬ 
thing that we can to prevent pilferages. 

We have not very complete statistics regarding claims paid, but 
I do think that on the Liverpool or eastbound traffic the claims for 
1920 as compared with the claims for 1913 and 1914 were about 500 
per cent in excess of the claims for the previous period. For 1921 I 
am quite sure they are going to be very much less because I see con¬ 
tinual reports of the out turns of cargoes, and can by that measure 
determine that we can not expect such serious results as we had dur¬ 
ing abnormal times. 

I do not think you wish to have me describe in detail and take up 
the time of the committee as to the methods on the pier, as they are 
very similar to those adopted by the other companies. 

Mr. Lehlbach. Your testimony would be that the same procedure 
and the same methods of safeguarding are pursued, as outlined by 
Mr. Imlay? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 295 


Mr. Guilford. Mr. Tmlav or any representative of any other 
American line. 1 would not want to make any comparison between 
them. I think we are all after the same end and that we are doing 
everything humanly possible. I do not think that by. paying out any 
more money we would accomplish any better results. 

Mr. Lehlbach. Can you tell the committee to what extent the other 
companies, with the exception of those whose representatives have 
testified here, adopt similar safeguards, police precautions, and watch 
precautions ? 

Mr. Guilford. We made a canvass of the various lines to determine 
if we were in any way lax or if they had any better methods than we 
have and we found that they were all; that is, all the established 
lines, the regular European lines we consulted with, taking virtually 
the same measures of precaution. 

Mr. Campbell. What are those lines ? Let us have the names. 

Mr. Guilford. Furness, Withie & Co., the Italian Line, Ward Line, 
Munson Line, the United Fruit, the Cunards, and the Anchor. 

Mr. Campbell. Grace & Co. ? 

Mr. Guilford. We did not consult Grace & Co. because our services 
are in no way the same. We do not handle the same class of traffic. 
I think those are the principal companies we consulted. 

Mr. Campbell. Did you examine into the methods used by these 
new shipping concerns who have been brought into the business ? 

Mr. Guilford. No; we did not; because we did not expect we could 
learn from them. 

Mr. Lehlbach. Did you ascertain what the precautions exercised 
by the Bull Line were in regard to safeguarding of cargo ? 

Mr. Guilford. I think they were also consulted at the time. 

Mr. Lehlbach. Do you know whether their methods in any degree 
differ from yours and those of other companies ? 

Mr. Guilford. I think that they possibly did cover the matter of 
checking a little further than we did. 

Mr. Lehlbach. I might say that a representative of the Bull Line 
is on his way here now to give the facts. I do not know what they are. 

Mr. Laws. Mr. Guilford, you are the claim agent of the Inter¬ 
national Mercantile Marine? 

Mr. Guilford. Yes, sir. 

Mr. Laws. What amount of claims for losses, pilferage, and non¬ 
delivery were presented to that company in 1920, say, and in 1921? 

Mr. Guilford. We keep no record of the number of claims or the 
amounts of claims presented. We keep a record of the amounts of 
the claims paid. 

Mr. Laws. Then you can not tell us what percentage of the claims 
presented is paid ? 

Mr. Guilford. There is really no relation between the two—between 
claims presented and claims for which we are really liable to pay. 

Mr. Laws. What do you mean by no relationship? 

Mr. Guilford. Because we receive claims, and I think it is a rule 
of the underwriters that all claims must be presented to the steam¬ 
ship company before the underwriter will deal with same. We get 
many of that type of claims which we automatically decline, because 
it is not our liability, and why should we keep a record? 

Mr. Laws. What underwriter is that? 


296 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Lehlbach. Can you give us an idea of what percentage of 

claims presented are in your judgment valid claims? 

Mr. Guilford. I never worked it out on the percentage basis, but 
I would not say.it is over 10 per cent. 

Mr. Lehlbach. Ten per cent are valid claims and 90 per cent are 
claims which you do not acknowledge as valid or do not consider 

valid ? . , A 

Mr. Guilford. They are not proper claims against the steamship 
company and do not come within our liability under the law. 

Mr. Edmonds. On that point, what do you mean by not coming 
within the law and not being valid? Do you mean that with these 
men that did not make claim within five days, the time in the bill or 
lading, you would not consider them ? 

Mr. Guilford. No; I did not refer to that. 

Mr. Edmonds. You would consider that not a valid claim? 

Mr. Guilford. We do not take that into consideration in the 
ordinary course of business if it is a valid claim that is within the 
risk. That is what we are guided by. 

Mr. Edmonds. In other words, you do not always take advantage 
of the fact that you could refuse a claim because it was within the 
time limit mentioned in the bill of lading? 

Mr. Guilford. We do not. 

Mr. Laws. Do you take advantage of the claim, for instance, of 
leakage, breakage, and all that class of thing, as the bills of lading 
exempt your line from as a defense ? 

Mr. Guilford. We rely upon the Harter Act as it is now written, 
to a great degree, which seems to properly limit the liability of the 
carrier. There seems to be no misunderstanding on that. 

Mr. Laws. Do you take advantage of the limited amount of your 
liability ? 

Mr. Guilford. Do you refer to the $100 clause ? 

Mr. Laws. Yes. 

Mr. Guilford. That is customary; yes. 

Mr. Laws. Who determines the question as to whether or not the 
claim is valid for your company? 

Mr. Guilford. Well, that is not exactly centralized. All New 
York claims I pass on. 

Mr. Laws. You pass on them? 

Mr. Guilford. Yes. As to Liverpool claims, we have a compe¬ 
tent man over there to pass on them. 

Mr. Laws. Does any insurance company or underwriter pass on 
that at all ? 

Mr. Guilford. In some cases. 

Mr. Laws. What company is that; the American Protection & 
Indemnity Co.? 

Mr. Guilford. We have no steamers in that association. 

Mr. Laws. Are they in the English company, protection and in¬ 
demnity ? 

Mr. Guilford. We have a few steamers in the Western England 
Association. 

Mr. Laws. And in that event they pass upon them. 

Mr. Guilford. Certain classes of claims; but, as far as I know, 
it has never interfered with the orderly procedure of handling 
claims and paying our losses in any way, shape, or manner. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 297 


„ lj '! t a f l 11 stands t0 ' da y y° u can not give the committee 

1 t0 t K ; num ber of claims presented, say, in 1920 or 
amonn? tw m w 6r and amount of claims presented, the number and 
a '" ] t V fc t , a , t we re Paid for pilferage, short delivery, nondelivery, 
defense the nature of the defense that was set up as to 
those claims, or the approximate amounts of those claims, can you? 

llr. Luilford. The question is somewhat involved and you in- 
innnateriaJ 9 ^^ 1 ^^ ^ acts ^ ere - You as ^ f° r information that is 


Mr. Laws. We do not think so. 

^ r * G[y iLF ORD. As far as the number of claims presented is con¬ 
cerned, it is not material. 

Mr. Laws. That is a difference of view. I asked you whether 
you could do that. J 

Mr. Guilford. At this moment? 

Mr. Laws. Yes. 

Mr. Guilford. I could give you some figures as regards the New 
York service and some figures as regards the Liverpool service. 

Mr. Laws. Give us the best you can, for the information of the 
committee; the total number of claims, for instance, presented for 
loss, theft, or pilferage, or nondelivery, say, in 1920. 

Mr. Guilford. We have never kept a record of the number of 
claims presented. 

Mr. Laws. The amounts of them? 

Mr. Guilford. Presented? 

Mr. Laws. Yes. 

Mr. Guilford. No. 

Mr. Laws. Then, of course, you can make no comparison of the 
number or amounts paid. 

Mr. Guilford. I can tell you That is absolutely immaterial from 
actual practical knowledge of handling claims for several years. 

Mr. Kirkpatrick. I did not quite understand your answer to one 
of the former questions. Did you say that it was the established policy 
of your office not to raise the question of the time when notice was 
given at all ? 

Mr. Guilford. It is the policy not to raise the question. 

Mr. Kirkpatrick. Not to raise the question at all? 

Mr. Guilford. I do not say but what we do raise that question if 
there are reasons why we should raise it. That is, we are dealing with 
all classes and conditions, and there are times when we must avail 
ourselves of the limitation, particularly if we feel that the claim is 
unjust. If we feel that a man is simply entering a claim and hopes to 
recover on a technicality, then we would resort to a technicality also, 
but if it is claim for which we are liable we do not quibble. 

Mr. Campbell. Can you give us any figures as to the amount of 
claims you paid in 1920? 

Mr. Guilford. I have before me a memorandum sent out by our 
Liverpool office, which covers claims on eastbound traffic and makes 
comparison between 1913-14 and 1920. I infer that during the 
period of the war they did not keep exactly the same records; that 
is the reason I have not them before me. For various reasons steamers 
were requisitioned by the Government and conditions were absolutely 
abnormal, so there is no use of making comparisons. For 1913 pil¬ 
ferage claims were paid in the amount of £1,305: 1914, in the amount 


298 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

of £1,977 pounds; and in 1920 in the amount of £12,495, showing an 
increase of something like 700 per cent compared with the period 
of 1913. 

Mr. Lehlbach. What is the increased business done between 1914 
and 1920? 

Mr. Guilford. There was a considerable increase in 1920. 

Mr. Lehlbach. Not in the same proportion? 

Mr. Guilford. Not in the same proportion. It indicated a condi¬ 
tion due to abnormal labor conditions which existed during that 
period. 

Mr. Edmonds. What has it been since the first of the year 1921 ? 

Mr. Guilford. I think from the first of the year, possibly further 
back than that, three months back from the first of the year, condi¬ 
tions have been very much better, due to a change in the attitude of 
labor, not alone our own labor but labor the world over. I do not 
think it would refer more particularly to longshoremen than it would 
to factories, where they pack the goods, and throughout. 

Mr. Edmonds, What additional percentages is there with the de¬ 
crease of business, or have you had a decrease in business ? 

Mr. Guilford. There has been a slump in our business the same as 
with all business. 

Mr. Edmonds. Would you say that the percentage of claims, con¬ 
sidered with the decrease of business, was less than before? 

Mr. Guilford. The percentage is less. It has decreased more than 
the decrease in the ratio of business. The actual conditions are de¬ 
pendent on the quantity of merchandise handled. 

Mr. Lehlbach. I believe from what you have said before that you 
are not in position to give us the increase in 1920 over 1914 of the 
number of claims presented. 

Mr. Guilford. I could get that information, but we have never 
thought of it. The number of claims has never meant anything to us. 

Mr. Lehlbach. Is the ratio between the claims paid and presented 
liable to be constant, or would the increase in number of claims be in 
about the same proportion as the increase in amount of claims paid? 

Mr. Guilford. The increase in the number of claims presented ? 

Mr. Lehlbach. Would the increase in the number of claims pre¬ 
sented be practically in the same ratio as is the increase in the amount 
of claims paid? I mean, is the proportion between claims paid and 
claims presented about the same right along ? 

Mr. Guilford. Yes. 

Mr. Lehlbach. The claims paid are about 10 per cent of the claims 
presented. 

Mr. Guilford. I think that would be the figure. 

Mr. Hickox. During the period from 1915 to the beginning of 
1921, were there any considerable number of new steamship concerns 
operating in New York? 

Mr. Guilford. Many; yes. They started in just at that period or 
a little later. 

Mr. Hickox. During that period? 

Mr. Guilford. During that period; from then on. 

Mr. Hickox. Have any considerable number of those ceased to 
operate by this time? 

Mr. Guilford. Yes. 

Mr. Laws. Have you a copy of that bill of lading? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 299 

Mr. Guilford. I haven’t it with me. 

Mr. Laws. Will you kindly get one? I would like to have one of 
your bills of lading on file. 

Mr. Lehlbach. We are going to get all the bills of lading. 

Mr. Herrick. Do you pass on the claims of the Red Star Line 
on eastbound traffic? 

Mr. Guilford. In regard to claims in connection with eastbound 
traffic it has been the practice as long as I can remember to handle 
same at port of destination. That seems to be the proper method of 
handling the claim. That is, the consignee is there and knows all 
about the local conditions, and our people have full records. 

Mr. Lehlbach. The goods are there, too. 

Mr. Guilford. The goods are there, and why should we settle a 
claim here that should be properly settled on the other side? I will 
say that the packers have tried hard to get us to settle claims on this 
side, and I have done all that I could to discourage that practice 
because it is not a practical method of handling claims, not because 
we wish to evade any liability or anything of that kind. That does 
not make any difference. If they want to force the issue, they can 
collect claims just as much here as there. There is nothing in the 
laws of the country to prevent it. I take it that will answer your 
question, that we do not, in practice, pass upon the eastbound claims 
here. 

Mr. Herrick. If you did pass on them here, would you hide behind 
the bill of lading on a shipment of meats that had been stowed in a 
hold that had previously contained carbolic acid? 

Mr. Guilford. I do not think there is anything in our bill of 
lading that would protect us. 

Mr. Herrick. Your bill of lading reads that you are not responsi¬ 
ble for loss or damage to goods on account of odors. 

Mr. Guilford. It may be in the bill of lading, but you can not 
get away with bad stowage. This idea of our passing the buck, I do 
not get that at all. We hear from our shippers that we are all the 
time passing the buck. I have wished we could, but we can not. 

Mr. Herrick. I have asked the question. 

Mr. Guilford. If that was the proposition, we would hide behind 
nothing. 

Mr. Herrick. Thank you. 

Mr. Campbell. How many steamers have you been operating and 
to what ports do you operate? 

Mr. Guilford. I think it is something like 110 steamers. I have 
not the exact figures. 

Mr. Campbell. What are the out ports ? 

Mr. Guilford. We operate between all North Atlantic ports and 
Liverpool, London, Manchester, Southampton, Glasgow, and to con¬ 
tinental ports of Antwerp, Hamburg, Dantzig, Naples, Genoa, Pal¬ 
ermo, and also have services with allied companies to Australia and 
New Zealand. 

Mr. Campbell. At the peak of the service how many Shipping 
Board boats did they operate ? 

Mr. Guilford. I speak of the boats entirely—76. 

Mr. Edmonds. You have no idea of the place where this loss 
occurs ? 


300 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Guilford. Pilfering occurs from the time the goods are packed 
until they are delivered, warehouse to warehouse, and to trjr to say 
where that occurs is almost impossible. We do know and have 
demonstrated that very much of the loss due to pilferage occurs 
before we received the goods, and we have very concrete instances 
of that kind. 

Mr. Edmonds. Are you able to check that up on the pier ? 

Mr. Guilford. Here is the difficulty from a practical standpoint: 
We have to load between fifty and one hundred thousand packages 
of merchandise into the steamer within a period of 48 hours. You 
will understand how impossible it is for us to carefully scrutinize 
every package. It can not be done. You can not load your ship. 
That is the practical end of it. 

Mr. Edmonds. What do you do with the package where it shows 
tampering ? 

Mr. Guilford. If a package shows signs of having been tampered 
with we have it opened if it is practical to have that operation done 
and determine the contents and then we sign for the contents of the 
package. If it does not show any outward signs we can not examine 
it, it is not practicable and it can not be done, and for a certain class 
of merchandise it would not do to open it on a dock. As I sav, the 
fact that we handle so many packages in such a short space of time 
gives the previous carrier the opportunity to saddle on us emptied 
packages and packages containing bricks and all sorts of things. 
That is what we have to contend with. When we come to the deliv¬ 
ery of the package at the port of destination—this is where it would 
apply to all ports—there is a much longer period given for the con¬ 
signee to remove the goods. In New York we give five days after 
the final discharge of the ship. The consignee is permitted to walk 
on the piers and examine his packages; he knows the goods, knows 
his packages, and he can tell immediately if a package has been 
tampered with, where a man in our employ would not be able to. 

Mr. Edmonds. Some of the packages accumulate with cargo and 
pile up there. 

Mr. Guilford. Not to any great extent. 

Mr. Edmonds. Suppose you have a package that evidently shows 
that it has been opened. What do you do in that case, with a package 
that looks as if it was tampered with ? 

Mr. Guilford. Notify whoever represents the shipper. It may be 
the lighterman or the truckman. If it is truck freight the truck¬ 
man is the only man we know, and he is there and supposed to repre¬ 
sent the shipper. 

Mr. Edmonds. Do you think it would improve the conditions to 
notify the shipper? If the captain of the lighter was doing the 
pilfering he would not tell about it. 

Mr. Guilford. That becomes a matter of record, and the captain 
can not evade the responsibility if he is responsible. 

Mr. Edmonds. Do you get convictions where you catch anybody? 

Mr. Guilford. That is rather difficult. We have had convictions, 
but it is not satisfactory. We meet all sorts of difficulties. We try 
to get the Federal authorities to interest themselves in the arrest of 
men where goods are in bond, but we have all kinds of difficulties and 
have to go through a lot of red tape to get anyone interested, and 
then they tell us the district attorney is very busy; he will not listen 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 301 

to these cases and we do not get anywhere. In a local court, before 
the magistrates, it is hopeless. We have had cases where we have 
caught red-handed men with merchandise and been able to identify 
that merchandise as coming from a particular case. That is, we knew 
it to be a fact. The magistrate would say, unless you produce the 
man who actually packed that case, there is no charge here. 

Mr. Edmonds. Can you get convictions in England? 

Mr. Guilford. Absolutely. The laws there are very rigid and 
convictions are commensurate with the act. 

Mr. Edmonds. \ou have cases that you know where the cargo has 
been pilfered by the crew or on the pier ? 

Mr. Guilford. Absolutely. We can tell that exactly, really. The 
methods of watching cargo and relations between the ship officers 
and ship staff are such that we can know exactly whether a pack¬ 
age has been pilfered before it is landed on the pier. We have re¬ 
ports prepared which are signed by both the ship’s officers and by 
the man on the pier. So you compare one with the other, and you 
know exactly what has occurred on the pier, and after discharge of 
the ship; so that certain pilferages may be traced to the ship and 
certain other losses to the pier. 

Mr. Edmonds. What percentage of these damages in England do 
you pay for in pounds or dollars ? 

Mr. Guilford. In pounds. 

Mr. Edmonds, That is not monev to-day. You pay for it in 
pounds ? 

Mr. Guilford. Yes. 

Mr. Edmonds. Does your bill of lading call for pounds or $100 ? 

Mr. Guilford. For $100 in most cases. I think some bills of lad¬ 
ing carry £20. 

Mr. Edmonds. You use both bills of lading. In your subsidiary 
companies you use the pound bill of lading? 

Mr. Guilford. On eastbound it is $100 or $150. 

Mr. Edmonds. Do you settle that in American money or American 
value ? 

Mr. Guilford. We settle in American values. 

Mr. Edmonds. Based on the current rate of exchange? 

Mr. Guilford. Yes; $100 means to-day £25. 

Mr. Edmonds. A shipper getting a settlement in Europe would 
get exactly the same money as here? 

Mr. Guilford. Exactly the same; there is no difference whether 
he makes his claim there or here. We do not get many complaints 
regarding the claims. I do not know just what this is all about. 
Our consignees and shippers are fairly well satisfied. We get some 
complaints in the ordinary course of business. 

Mr. Edmonds. Do you do South American business ? 

Mr. Guilford. No. 

Mr. Edmonds. Yqu probably know why you do not do some down 
there. 

Mr. Guilford. I do not quite understand how any steamship com¬ 
pany can evade its liability. We have not found a way to do it if 
we chose. 

Mr. Edmonds. You have evaded your liability under the Harter 
Act by reducing your liability to $100. 


302 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Guilford. The Harter Act is an accomplished fact. I am 
not arguing that point. 

Mr. Edmonds. Your liability being limited to $100, under that 
you have evaded it on a package worth $10,000. 

Mr. Guilford. We do not consider that evasion. That is our 
whole fabric of rate making, which is based on the limitation. Why 
do you call it evasion ? 

Mr. Edmonds. I am not saying anything to your detriment. 

Mr. Guilford. Evasion is detrimental. 

Mr. Edmonds. I did not mean it to be detrimental. I only tried 
to get the facts. 

Mr. Kirkpatrick. Do you have a higher tariff for goods of greater 
value which you will quote on demand ? 

Mr. Guilford. I am not the rate man. I do not know that detail. 
I know about the westbound rates. I quote westbound rates. As 
far as concerns the eastbound movements, of my own knowledge I 
do not know. 

Mr. Kirkpatrick. As a claim agent, has that situation ever come 
before vou of quoting on full value ? 

Mr. Guilford. That must always be considered. 

Mr. Kirkpatrick. I want to ask you whether there has ever been 
a claim made before you as the claim adjuster based on the full 
value for which the shipper paid the higher rate ? 

Mr. Guilford. I would like to answer that question by a little 
claim I have before me now. The shipper declared a value of 1,800 
lires—$75 according to the rate of exchange. The shipment moved 
from Naples to New York. A package was lost—disappeared; we 
did not know what happened to it. 

The consignee presented a claim, substantiated by a certified in¬ 
voice, showing that the loss was $2,908. Now, under your proposed 
amendment to the Harter Act, we can not limit our liability even 
to the declared value, but have to pay $2,908 and only collect freight 
on the valuation of 1,800 lire. Of course, the amendment can not 
pass when you think of a situation of that kind. There must be 
some obligation on the part of the shipper, at least, to declare the 
correct value, and that should be considered and will be considered. 

Mr. Kirkpatrick. Have you ever settled claims as a claim adjuster 
for the full value of the goods over and above $100 because the ship¬ 
per paid a higher rate than the regular rate to have the goods 
shipped ? 

Mr. Guilford. We quote a rate in addition to the rate on ordinary 
traffic, which waives the liability, the $100 liability, and in that 
event pay the claim in full. 

Mr. Kirkpatrick. Have you ever settled a claim of that kind ? 

Mr. Guilford. Repeatedly. 

Mr. Laws. What act did you refer to w T hen you iust said the act? 

Mr. Guilford. Amendment to the act. 

Mr. Laws. Amendment to what act? 

Mr. Guilford. The Harter Act. 

Mr. Laws. You are talking about a proposed amendment? 

Mr. Guilford. Yes. 

Mr. Laws. To which one of these proposed amendments are you 
referring ? 

Mr. Guilford. Contained in Senate bill 327. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 303 


Mr. Huebner. Do you refer to the McKellar bill ? 

Mr. Guilford. Yes. 

Mr. Lehlbach. The committee will stand in recess until 2 o’clock. 
(Thereupon, at 12.45 o’clock p. m., the subcommittee recessed until 
2 o’clock p. m.) 

AFTER RECESS. 

The subcommittee reconvened at 2.15 o’clock p. m., pursuant to 
recess. 

Mr. Edmonds. The committee will come to order. 


STATEMENT OF MR. WILLIAM E. BERNARD. 


Mr. Bernard. I represent the National Board of Steam Navigation 
of New York and the Vessel Owners and Captains’ Association of 
Philadelphia. 

We have had a conference with the various transportation interests 
represented in both associations, and every precaution known to 
them has been tried to avoid the losses occasioned by theft and pil¬ 
ferage. Most of the transportation coming to the steamship com¬ 
panies, as has been explained by testimony previously, is handled by 
either rail in connection with their own lighters to alongside of ship 
or by truck from the shipper to the pier of the steamship company. 
After the receipt for shipments by the steamship company, the system 
of precaution taken has been ably explained to the committee by 
previous witnesses. This in many instances is elaborated by some of 
the steamship companies; in others they are a little bit lax. 

Most of the trouble in the recent increase in theft and pilferage has 
been personnel or the morale, which we have had to contend with. 
Everyone in the shipping business knows exactly what they have 
had to do toward the operation of their vessels. Delays have been 
occasioned by our inability to get vessels loaded with freight, and 
after loaded with freight the proper bunkering, until the early part 
of this season, when we are now getting back to prewar or normal 
times. This not only exists in export business but it exists in coast¬ 
wise or local inland transportation. We have had it for years to 
some extent, but in recent years it has been reduced considerably; 
in canal or in inland transportation there seems to be that unknown 
privilege given to the handler of merchandise, and I must here re¬ 
mark that the men are not cognizant of any clauses or liabilities that 
the carriers may have that .would give them the privilege of pilferage 
or theft, and it is not done knowingly with the idea that the carrier 
does not take responsibility for that loss. 

I am quite sure if such was the case that if the men were going 
forward with such knowledge as has been expressed here by a great 
many of the shippers that the carrier would not be responsible tor 
any of the losses it would be carried on to a bigger extent, possibly, 
than what it is at the present time. I know your committee wants 
to do the just thing between shipper or carrier, and all in connection 
with the transportation of commodities, whether it be local, coast¬ 
wise or export. It means a great deal to this country, building up 
an American merchant marine. It is bound to act to their detriment 
if you can put the cause upon a certain body, that this thing ^ De¬ 
tected in a sense by the carrier or by the truckman m order to facili- 


304 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

tate certain gains that they might derive from it. They have got to 
have certain means of disposing of this material, for it is stolen in 
quantities, in some instances, quite large, as explained to your com¬ 
mittee by our other friend here the other day, and even he collected 
a claim from the railroad company for a loss after knowing that the 
railroad company had a clear receipt of the delivery of that material 
to the steamship company. As explained by the gentleman this 
morning, it is impossible in order to facilitate shipments to take the 
time to open up and examine the contents of a package*. Freight 
would be delayed, as ofttimes is the case. I have known it in ship¬ 
ments that have been sent that part of the shipment on account of 
the hurried condition of getting the vessel away has been left on 
the dock. In the matter of claim, in that respect, the consignee could 
not make his claim until he found out what became of that part of 
the shipment. We have frequently placed boats alongside of steamers 
as lightermen. Take a cargo of i,000 barrels of resin, in connection 
with the Merchants & Miners’ Transportation Co. for a local con¬ 
cern in eastern Pennsylvania. We have placed the lighter for the 
thousand barrels, and when the lighter got there, there were only 910 
barrels. We consequently had to go away with a shortage of 90 
barrels. We did not say they lost the 90 barrels. It might come 
along in the next ship ; it may not come along until two or three ship¬ 
ments. That is entirely a question of volume of freight and time to 
handle it. 

We must all admit that voyages are lengthened or shortened by 
the degree of the weather. That, of course, compels the steamship 
company to do as I have said in their shipments. In trying to re¬ 
lieve this situation I asure you myself, as a common carrier I have 
done everything possible to facilitate the delivery of cargo intact, 
and within the last nine months we have not had any complaints for 
loss either in the shortage of shipment or in the tampering with the 
package. I assure you on the part of the carrier that we solicit any¬ 
thing that you can do in cooperation with the shipper or carrier to 
better protect these goods. 

A great many have said here—I think there were one or two, and 
I think Mr. O’Connor mentioned this morning—that if they would 
make a rigid fine or a rigid penalty for the theft and pilferage of 
this material that it would no doubt go greatly to relieve the situ¬ 
ation. We have that only in our criminal cases. We all know that 
the penalty for murder is death, but it still goes on, and although the 
penalty is imposed we still have murders. 

If this committee can in any way at all out of the information de¬ 
rived from the various witnesses here come to some conclusion that 
will better the situation I am quite sure that the carriers would 
heartily cooperate. It has been stressed that if the carrier would 
take the entire responsibility and thereby increase his rate of freight 
to take care of the total loss of the package instead of relying en¬ 
tirely upon what our Congressman thinks is almost a dishonest act, 
the $100 liability in the Harter Act—let us see. We had our gentle¬ 
man from the West that said he knew the shippers would be per¬ 
fectly willing to accede to the increased cost of freight if they could 
be assured of the positive delivery and the lack of theft and pilfer¬ 
age. It is to be expressed here—the desire, I am quite sure, and the 
hearty support of the carrier—that if you can in your good judg- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 305 

ment see that an amendment to the Harter Act is going to be of 
material benefit to all concerned, and that the rate of freight can be 
increased so as to allow the carrier to assume the responsibility and 
the total liability for the loss—that is, of course, to be seen. As I 
said here—and others—competition, no doubt, would rule that situ¬ 
ation. But it seems to be on the part of men that are engaged in 
the handling of such stuff that if they can pilfer or steal in any way 
at all that it is very easy and well enjoyed, but even in instances 
where the extra rate has been charged by some of the steamship com¬ 
panies you have heard one of their representatives say that the lock 
was broken and that even though bars or barriers had been put there 
by the carrier to protect that high-class freight they even got into it. 

I know that every one of us are perfectly willing to do all that is. 
possible to cooperate with the committee, and, withal, I do not see 
where it is going to relieve the insurance end of the thing whatever 
because if the carrier is going to protect himself by a rate—he has 
got to have protection, and I do not think a rate, which really takes 
the full liability under his present scrutiny over the cargo, whether 
it is common or high class, is going to continue. 

The question was asked by the Congressman across the table 
whether the protection of high-class freight by an increased protec¬ 
tion given by the steamship company did not also increase the protec¬ 
tion to the common freight. I think so, because most generally 
those lockers are the part of the ship on which these cargoes are 
stolen, and are put into a position whereby to get access to the other 
cargo would be a little hard. 

If the committee desires any figures in connection with certain 
fosses that members of our association have sustained or paid, I will 
endeavor to have that compiled there and submit it to you at an 
early date; but at the present time I have not been furnished with it, 
and having had a conference with Mr. Joyce, who represents the 
lighterage department of the Central Railroad of New Jersey on 
this subject, he said that they have endeavored through the local 
interests of the port of New York to stop this matter and only em¬ 
ploy two classes of detective agencies and two classes of policemen. 
The lighters have been molested in instances where the captain has 
been drugged in order to get him out of the way and the stuff has 
been taken by river thieves. 

In fact, we have members of the association who operate tugboats 
and other tugboats have been tied up and have been boarded by 
river men who got onto the ship and took her out into the harbor 
to facilitate the moving of the lighter alongside the ship until they 
could take what they want and put her back. That has been done 
and the fireman and cook have been on board the boat, woke up 
and quited and kept so until the boat was sent back. We traced it 
up and found out who they were. It was impossible to put proof 
entirely on to them, but some of the goods have been confiscated and 
put back. 

It is a far-fetched question and it is not something that the steam¬ 
ship company can control entirely, and it is not right that they 
should assume the full liability for something that occurs previous 
to their getting it or after delivery to the lighter, between delivery 
to the consignee. 

60683—21-20 


306 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Edmonds. I do not think I said the limitation of liability 
contained in the bill of lading was a dishonest act. 

Mr. Bernard. The bill of lading? 

Mr. Edmonds. I did not say that. I said the fact that these peo¬ 
ple were stealing from this cargo was dishonest, and that we should 
not condone a dishonest act. 

Mr. Bernard. We do not want to hide, and I think the gentleman 
here who represented the claim department, in answer to a question 
from Mr. Herrick said that they did not want to pass the buck. I 
am pretty sure that every carrier will do all possible to locate, if it 
is within his nower. 

Mr. Edmonds. I hope so. 

Mr. Bernard. 1 know that. I asked that I be given this chance to 
testify as I have been called home on some important matters. If 
the committee desires any figures that I can procure it will be will¬ 
ingly done. I will be glad to answer any questions. 

Mr. Laws. You just said that you did not think it was fair that 
the steamship company should be called upon to pay fo-r losses that 
occurred prior to the time the goods got into the hands of the steam¬ 
ship or after they dock. That is reasonable? 

Mr. Bernard. Reasonable. 

Mr. Laws. Do you think it proper and fair for the steamship com¬ 
pany to be responsible for the losses that occurred while the goods 
are in their possession? 

Mr. Bernard. If proof can be made against them that the pilfer¬ 
ing has been done while the goods were in their hands they should 
afford the protection to the carrier that is proper and right. I have 
in my transportation body claims in settlements where it has been 
proven. I have not in recent years carried any whisky, but when 
we were carrying whisky there were at times losses which we could 
not find and on which we employed Pinkerton’s men who went trip, 
after trip on our boats, watched the men, and positively could find 
no evidence that it had been disturbed there. But it had been dis¬ 
turbed. The hoop had been loosened, and a gimlet hole bored, and 
it was drained out. The hole was covered with a piece of wood. It 
had been done by either the drayman or whoever brought it from 
the warehouse to the transportation company. We had the Pinker¬ 
ton people come and they had a force of men who all changed their 
watches along with the watches of the men on the boats and there 
was no proof to be charged against the transportation company that 
they did pilfer. 

Mr. Laws. But it is not just to the steamship company to hold them 
if it is legally and competently proven that the theft or pilferage 
or nondelivery occurred while the goods were in the hands of a 
given transportation company, which should be held responsible for 
that. That is true, is it not? 

Mr. Bernard. I will be frank in not giving anything that the 
steamship companies should be covered on in the future, but we have 
as local transportation companies had cases where it has been proven 
that the cargo was tampered with by the crew of the vessel, and the 
full loss was paid by the transportation company. We had one 
clause in our bill of lading of an exemption of $100. With the local 
coastwise business, I will be frank in saying that Mr. Laws men¬ 
tioned yesterday that the bill of lading was probably 8 by 6. We, 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 307 


of course, in the local interests have carried considerable pig iron. 
In the early days a great many of the jumpers would stop those boats 
and the boat would be taken off down the river or anywhere in 
transit under cover of darkness, the harbor facilities being employed, 
and in that instance, of course, we paid our claim for the losses of 
material as weighed out We had no way of weighing that cargo 
into the boat hold. We took the shipper’s count and shipper’s weight. 
After that we made our freight rate to such an extent that Ave are not 
liable for any loss of that on board to be delivered unless proven that 
it was tampered with by the crew, and after one arrest or two arrests 
in a season that would obliterate any other cases during the year. 
But I think the carrier should have the benefit of the Harter Act in 
connection with the navigation of his vessel. As to the matter of 
limitation, that, in my mind, is a question whether you can increase 
that liability by an increased rate of freight and be a benefit either 
to the carrier or to the shipper. 

STATEMENT OF MR. R. A. RRESEE, JR., NEW YORK PORT 
MANAGER, MUNSON STEAMSHIP LINE. 

Mr. Bresee. I am the New York port manager of the Munson 
Steamship Line. My position is very similar to that of Mr. Hanlon, 
who previously testified. 

Mr. Campbell. How many steamers does the Munson Line operate ? 

Mr. Bresee. They own about 17 and operate \ r arious others, de¬ 
pending upon the state of business, up to over 100. 

Mr. Campbell. Are you an operator of Shipping Board vessels ? 

Mr. Bresee. Yes, sir. 

Mr. Campbell. How many at the peak of your service have you 
had? 

Mr. Bresee. I can not answer that exactly; in the neighborhood of 
70 to 80. 

Mr. Campbell. To Avhat ports are you operating? 

Mr. Bresee. Cuba, Mexico, and South America chiefly. 

Mr. Campbell. Are you operating any Shipping Board vessels to 
these ports, any liners ? 

Mr. Bresee. We are operating Shipping Board vessels to South 
America all the time. 

Mr. Campbell. To Avhat ports in South America? 

Mr. Bresee. Rio, Montevideo, Buenos Aires, Santos—practi¬ 
cally all. . _. . 

Mr. Campbell. Who has charge of that service — Mr. Knowles, of 

your company? . . 

Mr. Bresee. Mr. Knowles has charge of that service once it leaves 

New York. 

Mr. Campbell. Will he be here this afternoon? 

Mr. Bresee. We have sent for him. 

Mr. Campbell. Will you tell the committee just exactly what the 
situation is with your company at New York, so far as you know* 

Mr. Bresee. I shall be "lad to. To begin with, when a truck load 
of freight is proffered for delivery, a man goes out and gives the 
driver a ticket for the number. That serves a double purpose. It 
o-ives him his place on the line and it is taken up when the truck 
comes into the dock. That is to guard against the possible collusion 


308 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

between the driver and some checker who may be in our employ 
whereby the truck might not go down to the dock at all and the 
goods be receipted for. The goods go through the ordinary process 
of proceedings such as have been outlined bv the other gentlemen 
who have testified, and checkers are assigned to check the merchan¬ 
dise, note its condition, etc. If the truck is empty when it leaves the 
dock, it is not challenged, of course. If it has any packages aboard, 
a pass is issued by the checker and that pass is taken up by the 
watchman at the gate after being countersigned by the dock boss 
or somebody in authority. That makes it necessary to have two 
names on every pass for a truck going out of the gate with packages 
aboard. That is to prevent the checker and driver from getting into 
collusion and the driver not delivering all his packages in the event 
that he picks up something on the pier. When goods are delivered 
by lighter they are checked or tallied in the usual manner, and in 
addition to that the lighter is inspected at the conclusion of its work 
to make sure that none of our cargo destined for our vessel has been 
left aboard either by inadvertence, carelessness of checking, collusion, 
or any other reason. 

That is done by an independent individual, the idea being to have 
as many people involved as possible and to lessen the chance of col¬ 
lusion. The docks are protected as to watchmen adequately. The 
number of men on each pier each day depends entirely on the amount 
of cargo there, and whenever vessels are working and handling 
broachable cargo or where broachable cargo is already in the holds 
watchmen are placed in each and every hold. 

We have a system of passes for individuals so that a person who is 
not known who does not carry a pass is not allowed down the dock. 
That, of course, is to keep out anybody who has no business there. 
We have a pass system whereby individuals are not allowed on the 
docks unless they are known or have a pass, in the event of their 
coming there for the first time. That is to keep unauthorized persons 
off the docks so that we know as well as we can know who is on our' 
docks. 

The precautions that I have outlined already apply on all classes 
of cargo. We have, similarly to the other lines, a list of so-called 
special cargoes which goes through an expert checking process be¬ 
cause of its susceptibility to pilferage. This list will include boots 
and shoes, wearing apparel, dry goods, silks, which it is unnecessary 
to repeat, as it has been sufficiently given already, I think. Those 
cases are very carefully scrutinized for condition, and they are 
weighed upon being received. If the weight agrees with the weight 
•on the receipt as declared by the shipper, that is all right. If it does 
not, the shipper’s attention is immediately called to the discrepancy. 
These packages are kept together in one part of the dock, and the 
watchman posted to see that they are not touched while on the dock. 

Mr. Campbell. What system of watching do you use on your dock? 
Let us go into that. 

Mr. Bresee. Our watching is done by the agency system. We 
have not our own police force. We deem it best to stick to the 
agencies. 

Mr. Campbell. What do you mean by agencies? 

Mr. Bresee. For instance, William J. Burns Detective Agency is 
one of them. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 309 

Mr. Campbell. Just what system do you maintain? 

Mr. Bresee. These agencies supply us with the watchmen that we 
require. They work on an 8-hour shift, midnight to 8, 8 to 4,4 to mid¬ 
night. Each of these shifts is supervised by a roundsman who makes 
his rounds and sees that the dilferent men or individuals are on their 
posts and on their job. 

Mr. Lehlbach. Vou contract for that service with the agency and 
then they furnish these men ? 

Mr. Bresee. Yes. 

•Mr. Lehlbach. Has that worked satisfactorily? 

Mr. Bresee. It has. 

Mr. Lehlbach. Any losses on the docks? 

Mr. Bresee. We have had a few, but very few. 

Mr. Lehlbach. Do you hold the agency responsible in any way for 
losses ? 

Mr. Bresee. We have been able to make a few collections for a 
few cases. There have not been many cases, but where we have a clear 
case against the agency we have found them willing to pay. 

Mr. Lehlbach. You mean where employees of the agency have 
themselves stolen goods ? 

Mr. Bresee. No; i do not mean that. I mean where goods have 
been pilfered or broached while under supervision of the agency. 

Mr. Lehlbach. Are they supposed to insure the success of their 
service and pay if they are unsuccessful in preventing larceny? 

Mr. Bresee. They are under no definite agreement, but. as I say, 
in the very few cases we have had we have found them willing where 
it is a clear case against them. 

Mr. Campbell. How large is the crowd of watchmen maintained 
on your dock ? 

Mr. Bresee. It depends entirely on the amount of cargo there. 
Take a small operation like on Pier 9 and Pier 10, East River, five 
hundred and odd feet long, we sometimes have five or six, and again 
only two or three or four. If we are full of cargo we will have five 
or six on each pier, and in addition to the watchmen in the holds of 
the ships when the ships are working, as I have explained. 

Mr. Campbell. What precaution is taken aboard ships during the 
voyage ? 

Mr. Bresee. That is a little bit beyond the scope of my authority, 
Mr. Campbell. I can tell you what"happens up to the time it goes 
aboard because that is in my department. 

Mr. Campbell. What do you do on board a vessel with the special 
cargo that pays a higher rate ? * 

Mr. Bresee. It does not pay a high rate. It gets this attention 
because of its nature. 

Mr. Campbell. What? 

Mr. Bresee. I was going along on that and I will continue if I 
may. I have already said" that it has been weighed. Each case is 
given a serial number and we have forms on which the record is 
entered, and finally the cargo is weighed a second time when it is 
being loaded aboard the ship just at the time of loading, and the 
weight compared with the previous weight. It is then receipted for, 
usually by the mate of the steamer, under his supervision. 

Mr. Edmonds. He pursues the same checking system as the other 
lines. 


310 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Bresee. There is very little difference from what I have heard 
testified. 

Mr. Edmonds. Is there any material difference in the system in 
vogue in your company and that which has been testified to by Mr. 
Hanlon, Mr. Guilford, and Mr. Imlay, in respect to their com¬ 
panies? 

Mr. Bresee. I see no important variation. 

Mr. Edmonds. What is it you are not doing that you can physi¬ 
cally do to give better care and custody of that cargo ? 

Mr. Bresee. I can think of nothing. I am sure if there was any.- 
thing we could think of or that anybody could suggest to us we 
should do it. 

Mr. Campbell. What is your observation as to whether thefts are 
decreasing or increasing with the change of labor conditions which 
has been testified to? 

Mr. Bresee. We have so few on our piers and have had so few for 
the last several years I do not think that can come within the scope 
of my jurisdiction either. The answer is we do not have many; we 
have next to none. Perhaps I do not express myself clearly. 

Mr. Edmonds. You do not know anything about the operation of 
claims in regard to the delivery of freight at the other end? 

Mr. Bresee. No, sir; not in detail. 

Mr. Edmonds. How about your incoming freight? 

Mr. Bresee. The incoming freight is handled in a very similar 
manner, watchmen posted in the holds, the condition noted when 
the goods get on dock, and then they come under the supervision of 
the same class of watchmen, and receipts are taken as the property is 
delivered. 

Mr. Campbell. That is all I care to ask. It is cumulative very 
largely. 

STATEMENT OF ME. J. N. SENECAL, AMERICAN STEAMSHIP OWN¬ 
ERS’ MUTUAL PROTECTION AND INDEMNITY ASSOCIATION 

(INC.). 

Mr. Loines. Are you a member of the legal staff of the Associa¬ 
tion of American Steamship Owners? 

Mr. Senecal. Yes, sir. 

Mr. Loines. You have charge of the claims for shortages in car¬ 
goes that occur in New York? 

Mr. Senecal. Yes, sir. 

Mr. Loines. Will you please present to the committee the brief 
analysis you have made of the shortage situation and then give such 
instances as you can of the conditions here? 

Mr. Senecal. Yes, sir. For the past year and a half I have had 
charge of a large number of shortage and pilferage claims to and" 
in and around the port of New York. In most cases I have con¬ 
ducted an investigation to determine, if possible, where the pilfer¬ 
age or shortage occurred first; second, who committed the act; and 
third, to endeavor, if possible to bring the guilty parties to trial and 
conviction. An examination of most of these claims shows that you 
can divide the subject into three main divisions—first, the pilferage 
and petty thieving which is committed by longshoremen during the 
loading and discharge of a vessel and while the merchandise is 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 311 

stored on the pier, and stealing by river thieves and shenangoes 
while the merchandise is stored on the pier, stealing by members of 
the crew while the vessel is on the high seas or during the loading 
and discharging. 

* S a seconc ^ c i ass of shortages and pilferages brought about 
probably by a conspiracy between the lightermen or truck drivers 
and steamship checkers, also a large number of cases of mysterious 
disappearance of packages, probably brought about by a similar con¬ 
spiracy. There are a large number of other claims that we know 
and speak of as concealed losses or substituted losses, and these are, 
in my opinion, invariably caused by truck men. Cases will turn out 
at destination apparently untampered with, contents apparently 
O. K., and when the case is opened it will be found that ashes or 
other substances have been substituted for the original contents. 
Quite recently we were presented with a claim for cases of condensed 
milk which were outturning in France. When the cases were 
opened they were found to contain ashes. We started an investiga¬ 
tion at this end and solicited the cooperation of the manufacturer. 
He caused a search to be made on the records of men employed in 
their shipping department, and found in most of the lockers a large 
number of tins of milk. 

Another quite recent case is a case where a policeman on the 
Brooklyn water front observed an automobile acting rather sus¬ 
piciously. He spoke to the man, searched the back seat of the car, 
and found a bag containing a large number of shoes. Each shoe 
had the factory number on it and upon communicating with the 
factory they advised us that these shoes were supposed to be in a 
case which was then in the possession of the steamship company. I 
attended at the pier of the steamship company with a representative 
of the insurance company and a representative of the shipper and 
we surveyed the case. Nobody was able to see where the case had* 
been in any way tampered with. The case was opened and found 
that each pair of shoes had been extracted and in place a small piece 
of wood placed in each box. The case was further investigated and 
it was found that the case had been in the possession of the truck 
driver over night and, subsequently, a conviction was obtained 
against the truck driver and two of his conspirators. 

One way in which the shipper can cooperate if they will is by 
making all deliveries to the truck drivers on the morning of each 
day, thus insuring delivery to the steamship company on the same 
day and avoid the possibility of this case remaining on the truck 
over night. 

The American shipper can also improve the standard of his pack¬ 
age and in all cases of valuable cargo the cases should be strapped 
or wired, or both. The exporter can by eliminating his trade-mark 
from the goods aid the steamship company. Some of the trade¬ 
marks are so well known that a sailor or a longshoreman knows at 
once what is contained in the case. 

As a brief illustration of what some of these thieves will do, a 
case occurred on the piers of New York City on Columbus Day; 
about 5 o’clock in the afternoon of that day a truck drove past the 
watchman on a Brooklyn pier and proceeded to load some seven 
drums of grain alcohol which were then stored on the pier. The 
watchman at once put in an alarm; the detective force responded and 


312 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

apprehended the men. During the course of this one of the thieves 
was shot. Upon the trial of these men it was testified that one drum 
of grain alcohol at the present time, if properly diluted and colored, 
was worth about $7,000 over the various bars in the city. 

Another large theft which occurred in the port of New York is a 
theft of the entire lighter containing grain alcohol. The lighter was 
stolen away from the pier and later found abandoned in the harbor 
of New York. So far as known nobody has ever been apprehended 
for that act. 

Mr. Edmonds. The lighter disappeared? 

Mr. Senecal. The lighter disappeared. The lighter has been 
found subsequently. When this pilferage wave was at its height 
about a year ago the customs authorities in New York City were 
large losers. It seems that cases of general merchandise are in a 
number of instances sent to public stores for the purposes of ap¬ 
praisal. These cases are segregated on the pier under the control of 
the customs guard and various public store trucks sent from bonded 
warehouses to pick up these cases and remove them to the ware¬ 
houses. During the last winter a number of truck men in some way 
obtained a license of one of the public store trucks and in that way 
made away with a large quantity of merchandise variously estimated 
at as high as one-half a million dollars. 

Quite recently a representative of one of the underwriters called 
upon me for aid in investigating a concealed loss consisting of sev¬ 
eral cases of stockings which, when opened in the customhouse, was 
found to contain nothing but ashes. He mentioned in passing over 
this claim that he had similar claims from the same shipper during 
the last year aggregating abnut $100,000. 

On behalf of this association we have endeavored in all cases to 
secure convictions, preferring whenever possible to bring in an action 
in the Federal' court under the act of February, 1913, making it a 
crime to steal from interstate and foreign shipments. This act was 
originally intended to apply probably only to rail shipments, but its 
terms were broad enough to permit the starting of these actions for 
stealing on piers and on ships within the 3-mile limit. 

Mr. Edmonds. Did you bring these actions in the United States 
court ? 

Mr. Senecal. Yes, sir. 

Mr. Edmonds. Then, of course, the ship is covered by the other 
sections, so. you could bring the stealing on the ship in’the United 
States court also. 

Mr. Senecal. Anything stolen on the high seas; yes, sir. The dif¬ 
ficulty with this section is that the first requisite is to prove that the 
goods stolen were part of an interstate or foreign shipment, and in 
order to do that they have got to be fully and completely identified; 
and when a man is found with a pair of stockings in his possession’, 
or a bolt of silk, without any trade-mark, it is practically impossible 
in all cases—it is practically impossible in court—to hoid him or to 
get any jury to convict him. Another thing in the Federal courts is 
that there is no provision for petty larceny. If you steal $1 worth 
it is as much a crime as to steal a million dollars’ worth, and as a con¬ 
viction by a Federal jury seems to take away the privileges of citizen¬ 
ship juries are quite reluctant to convict in small cases, principally 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 313 

because of this reason. In a large number of cases—for instance, 
transshipments moving through this country to Cuba—there will be 
nobody m this country who can testify that' they packed in this case 
the same goods which were later found in the possession of the long¬ 
shoreman or some other third person, arid these cases have failed. 

It would seem possible to amend that statute to make a distinction 
, between petty and grand larceny and to so give the United States 
commissioner the power to try and convict men under indictment for 
petty larceny. At the present time all cases have to be before a 
federal judge or district judge. If he has power to sentence them 
foi a- certain number of years in a large number of similar cases one 
conviction which has occurred would stop this evil more than anv- 
thing else. 

. Mr. Edmonds. Have you any record of men stealing on the high 
seas? 

Mr. Senegal. Yes, sir; I have such a case. 

Mr. Edmonds. Did you arrest the sailor? 

Mr. Senecal. The sailors are arrested, and indicted by the grand 
jury, and when they happen to be foreigners the bail was reduced to 
$100 and the bail has been forfeited in each case. 

Mr. Edmonds, Is that in the Federal court ? 

Air. Senecal. The Federal court. 

Mr. Edmonds. It seems to me that is evidence of a miscarriage of 
justice, when the penalty is 10 years in prison and $10,000 fine. 

Mr. Senecal. I have two such cases, and in one of them eight men 
were arrested. Bail in each and every case was forfeited, and in the 
other case they have not been brought under trial. 

Mr. Edmonds. I should say that district judge was very derelict 
in his duty to make such a fine in such a case. 

Mr. Senecal. The fine was not $100; the bail was made $100. 

Mr. Edmonds. I mean bail. 

Mr. Lehlbach. Is that before the United States commissioner ? Is 
the bail fixed by the commissioner? 

Mr. Senecal. Yes. 

Mr. Edmonds, It is fixed by the grand jury? 

Mr. Senecal. The grand jury does not fix the bail. 

Mr. Edmonds, The court does it, 

Mr. Lehlbach. The commissioner fixes the bail. 

Mr. Senecal. The commissioner fixes the bail. After the grand 
jury indicts we arrange that. 

Mr. Edmonds. Then, I should say the commissioner was very dere¬ 
lict in his duty. 

Mr. Senecal. At the present time pilferage is on the decrease and, 
in my opinion, is mostly an aftermath of the war. As an example 
of that, about a month ago I was on a pier in the city of New York, 
and some stevedores were observed smashing a case, allowing it to 
drop heavily so that it would break. The attention of the boss 
foreman was called to this. Without any hesitation he walked up 
and—biff, biff—he discharged those men. A year ago there was no 
foreman in the port of New York who would have dared to do such 
a thing, because it would have meant that the men would have walked 
out, and when he went home that night two or three bricks would 
have followed him. 


314 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Loines. Would that have been possible during the war—for 
him to have discharged those men? 

Mr. Senecal. It was; yes, sir, in my opinion. 

Mr. Edmonds. You are a solicitor of the Protection and Indemnity 
Association ? 

Mr. Senecal. Yes, sir. 

Mr. Edmonds. The Shipping Board is among your clients, are 
they? 

Mr. Senecal. Yes, sir. 

Mr. Edmonds. Have you taken steps to investigate these losses? 

Mr. Senegal. 1 have been investigating these claims, as 1 say, with 
the idea, first, of finding out whether they occurred; second, who 
did it; and then trying to convict these men. 

Mr. Edmonds. Do you take advantage of all the terms of the bill . 
of lading in refusing claims? 

Mr. Senecal. No, sir. 

Mr. Edmonds. These cases were brought to our attention a short 
time ago—10 or 12 cases, which seemed to come from your associa¬ 
tion—in which you refused to pay them, on the basis that claim was 
not made within the time limit. 

Mr. Senecal. I have no personal knowledge of any such claims. 

Mr. Edmonds. I think that was true of some claims that were men¬ 
tioned here. 

Mr. Ambeeg. For the sake of the record, it ought to appear that 
the Protection and Indemnity does very commonly waive this notice 
provision; but it seems unfair to us that when a certain claim conies 
along they should have the opportunity of becoming judges and 
availing themselves of this notice of claim and refuse to pay it on the 
ground that the claim was not filed in time, and therefore the 
claimant has no further redress. 

Mr. Edmonds. Sometimes they do waive it ? 

Mr. Am berg. They do very commonly. The Protection and In¬ 
demnity is very liberal in waiving that notice of claim, but never¬ 
theless that does not change the fact that in our opinion it is wrong 
and the notice is unreasonable—for instance, that notice should be 
given at the time of removal from the dock. 

Mr. Edmonds. Do the regular insurance companies take that same 
advantage of the failure of notice or do they not have that in their 
policy? 

Mr. Amberg. They do have that. That question comes up in 
marine policies, the question of notice of loss, and the courts have 
held that failure to give notice of loss which is called for vitiates the 
policy. It is a condition preceding liability, and under certain con¬ 
ditions insurance companies do take advantage of it. There is no 
question about that. It generally calls for prompt notice under the 
circumstances. 

Mr. Edmonds. But actually the rules of the Protection and In¬ 
demnity Association are along the same lines as those of the insurance 
companies. 

Mr. Amberg. Except that some of the provisions as to notice of 
loss *re too strict and can not, as a practical matter, be complied with. 

Mr. Loines. Mr. Senecal, will you tell the committee what some 
of the underwriters or shippers have been doing recently for the 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 315 

prevention of pilferage, and the attitude of some of the express 
present time toward the pilferage question? 
r. Senegal. ^ es. I attended last winter a series of conferences 
brought about by a detective agency at the port of New York for the 
purpose of combining shippers and carriers, in an effort to reduce pil¬ 
ferages. During the course of those meetings, what I gathered to be 
the consensus of opinion of the shipper was that he wanted to 
pave his case turn out at destination complete, as there was no profit 
in having part of the case turn out, and in having a claim against 
the steamship company. That is the same thing that the steamship 
company wants. 

During one of these conferences one of the express company repre¬ 
sentatives spoke, saying that they had probably been the big sufferers 
from pilferage during the past two or three years. He gave the 
amount of his loss and how hard it was to trace the various pil¬ 
ferages. Pie stated that in his opinion the pilferage evil was solving 
itself; that their losses were continually going down. 

Mr. Edmonds. You have no figures*to prove that it is going down, 
though ? 

Mr. Senecal. I believe lie has. 

Mr. Edmonds. Have you got them with you? 

Mr. Senecal. I am not from the express company. 

Mr. Edmonds. I mean your figures. 

Mr. Senecal. No; I haven’t any figures, but I know of his figures. 

Mr. Edmonds. And you think they have rather let up now, prob¬ 
ably because it is hot weather and they do not want to work so hard? 

Mr. Senecal. No, sir; but I have seen a large number of these 
claims, and I have seen them gradually falling off. I will say this, 
I think these concealed losses, losses that do not occur while the cases 
are in the custody of the steamship companies—I think they are on 
the increase. I have had more of these cases brought to my atten¬ 
tion recently. 

Mr. Edmonds. That is left all in the hands of the truck driver? 

Mr. Senecal. Or with the shipper, or any place. I examined a 
case only yesterday that was supposed to contain revolvers. Every 
revolver had been taken out and other stuff substituted, yet out¬ 
wardly the case appeared to be in No. 1 condition. Suspicion was 
directed to it because of the fact that it happened to be some 15 
pounds under weight. It is very rarely that these truckmen when 
they substitute contents fail to make up the proper weight. 

Mr. Loines. Was that an export case being delivered by a truckman 
to the steamship company? 

Mr. Senecal. Yes. sir. 

Mr. Loines. And the shortage of weight was detected by the steam¬ 
ship company immediately after delivery? 

Mr. Senecal. Right after delivery. 

Mr. Edmonds. Would not the continuous weighing of packages at 
the piers, to see whether the weights correspond, help a great deal? 

Mr. Senecal. No, sir. This is the first case of substitution I have 
found where the weight varied 1 ounce. We had a case some time 
ago, a transshipment of merchandise from Liverpool to Cuba, where 
the case came out of a junk shop and the policeman arrested the 
driver. The case was taken over to the police department. We 


316 THEFT, ETC., OF EXP ORT AND IMPORT SHIPMENTS. 

weighed that case and it weighed to within an ounce of what the out¬ 
side of the case showed it should weigh; yet woolens had been taken 
out; rocks, iron, and waste had been substituted. 

Mr. Edmonds. Well, when you take a large case like that, of course, 
a man must have a pretty fair-sized scale to take care of it. Truck 
drivers, as a general thing, do not have a scale of that size around 
the place. 

Mr. Loines. You do not know the truck drivers. You do not know 
how well they are organized. 

Mr. Edmonds. Unless he wants to do this kind of business. 

Mr. Loines. He does want to do this kind of business, and he is 
well organized to do it. He is a tool in the hands of a lot of fences. 
These things that he steals go to the fence. 

Will you tell the committee something about the fences, Mr. Sen- 
ecal? You are in touch with that situation. 

Mr. Senecal. Yes; the fences in New York have been doing busi¬ 
ness for 15 years. There is one. along the Brooklyn water front who 
openly boasts that he is in this business and defies anybody to con¬ 
vict him. Nobody ever has. They hav& convicted his lieutenants. 

There is a fence in the lower part of New York City on Morris 
Street, a junk shop there—and the object in having a junk shop at 
that place seems to be to meet these trucks which come down from 
the west side carrying freight on the way to Brooklyn, across the 
ferry there. These fences have been watched by the police depart¬ 
ment and they have never been convicted in New York City. The 
police know they are there, but they do not seem to be able to convict 
them. 

Mr. Edmonds. What do you do when you find that the police can 
not convict them ; do you just give it up? 

Mr. Senecal. We do not; no, sir. I have wandered around the 
piers at night and other people have, too, looking for these things. 

Mr. Edmonds. But do you not endeavor to find some way to break 
it ? 



r. Loines. Tell about the employment of detectives by us to do 


that. 


Mr. Senecal. We have employed—whenever an unusual case came 
in we have at once gone out and employed detective agencies, using 
all manner of detective agencies, one detective agency being better 
on a certain type of case than another, and quite naturally these de¬ 
tective agencies do not work for nothing. 

Mr. Edmonds. You know this fence is in Morris Street? 

Mr. Senecal. I know where he is; yes. 

Mr. Edmonds. Can you not have a man around there—emploj^ de¬ 
tectives for a week or two in order to get him ? 

Mr. Senecal. We have done that, but during that period nothing 
happened. 

The junk dealers have an association, and if you arrest one of 
them you can not keep him in jail over two minutes. His bonds¬ 
man will be there and his lawyer will be there, just like that. They 
have been doing business, not alone on the water front, but they have 
been stealing from the rail cars; they have stolen from everybody. 

Mr. Edmonds. You have the Federal law there, too. 

Mr. Senecal. And every now and then one is convicted. 

Mr. Edmonds. Ho you try them under the Federal law? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 317 

the^Federa^Kw ^ GVery Case ’ yes ’ sir; 1 bring my in(lictment under 
deafers up? 0NiDS ’ ™ ldt ha PP ens wheri 3' 0U get one of these junk 

junk*dealer AL * ^ * laVe never bad a g° od case against any of the 

Mr. Loines. What is the difficulty in convicting the junk dealer ? 
Explain that. & J 

Mr * Senegal. Well, you take any number of cases: you can 
search the junk shop and you will not find the stolen goods, A r et you 
know they have been stolen. Then, the second thing you always 
lun up against, is the question of identity. I come into court with 
a dozen silk stockings, and I say they were stolen from a case 
moving from NeAv York to Hamburg; the defendant appears in 
court, with his attorney, and he brings in two dozen other silk 
stockings of the same kind, and he says, “ What proof is there that 
my man did not go out and buy these stockings?” Anybody can 
buy these stockings. The mere fact that stockings are found there 
does not prove that they are stolen. It is the hardest thing in the 
world to convict on. You can convict a man for murder on cir¬ 
cumstantial evidence, but it does not seem possible to do it in the 
case of receiving stolen goods. 

Mr. Edmonds. Have you ever tried putting your own driver on the 
truck delivering stolen goods, and try to see whether you could get 
them that way? 

Mr. Senecal. That has been tried. 

Mr. Edmonds. Doesn’t that work, either? 

Mr. Senecal. No, sir: it does not work. 

Mr. Edmonds. The junk dealers have got everything their own 
way in New York, have they? 

Mr. Senecal. Well, they have been doing business there since be* 
fore I was born, and they probably will be doing business when I am 
dead. 

Mr. Edmonds. It seems to me that a shipowners’ organization such 
as Amu have ought to be able to handle a small man like a junk dealer. 

Mr. Senecal. They are not small men. A man who has been a 
fence for any length of time is not a poor man by any means. He 
is driving around in his car; and it is not the man who steals Avho 
makes the profit out of these pilferages. The truck driver, the man 
who takes a big chance, gets a $10 bill or $20 bill, but the fence who 
takes his merchandise and sells it up in Bridgeport at night, or sells 
it there the next day or in Philadelphia the next day, makes the 
money out of it. 

Mr. Edmonds. How long has your organization been in existence ? 

Mr. Senecal. Since 1917, I believe. 

Mr. Edmonds. Ha\e you any record at all of the increase in crime 
that you have encountered, due to which claims have been made 
against the steamship companies in the past 5 or 10 years? 

Mr. Senecal. They have not been in existence over 5 years. I 
have only been there a year and a half myself. 

Mr. Edmonds. Do you think there has been an increase in this loss 
due to disorganization? 

Mr. Senecal. In what respect? 


318 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Edmonds. The disorganization of sailors, taking things into 
their own hands? 

Mr. Senecal. There can be no doubt about the fact that the sailors 
have been very unruly, very hard to discipline since the war. 

Mr. Edmonds. Has it led to any increase in the crime that has been 
committed by sailors ? 

Mr. Senegal. I think so. But the proportion of pilferage which 
is committed by the sailor is very small. He does not have an oppor¬ 
tunity. 

Mr. Edmonds. It is not so very small when one time they took a 
whole ship and kept it for three months. 

Mr. Senecal. No, sir. 

Mr. Edmonds. That runs up pretty high, when the sailor can take 
a whole ship and run away with it. 

Mr. Senecal. Yes, sir; it does. 

Mr. Laws. Mr. Senecal, you said that you thought pilferage was 
on the decrease recently? 

Mr. Senecal. Yes, sir. 

Mr. Laws. By what do Amu judge that? 

Mr. Senecal. By the number of claims which I have seen. 

Mr. Laws. Do you see all the claims; is that part of your juris¬ 
diction ? 

Mr. Senecal. I see a large number of pilferage claims occurring in 
the port of New York—not all of them; no. 

Mr. Laws. And from whom do those claims come ? 

Mr. Seneical. They come from various members of our associa¬ 
tion. . 

Mr. Laws. From various members of your own association? 

Mr. Senecal. Yes, sir. 

Mr. Laws. That does not take into account, I presume, the large 
Yumber of claims that are presented by shippers first to their consul 
and turned down, and nothing further is done with them, because 
they can not recover under the limitations? 

Mr. Senegal. Well, because they can not recover under the limita¬ 
tions—my experience has been that this limitation affects very few 
claims. It is only going to affect general merchandise in the first 
place, and it is most liable to affect silk, leather, stockings, and things 
like that. Now, silk comes under section 4281 of the Revised 
Statutes. 

Mr. Laws. Well, if I say to you that claims that are in the hands 
of counsel, marine counsel, cover all classes of stuff that is subject to 
theft and are being turned down every day, not one but dozens of 
them every day, and the clients are advised that they can not recover, 
would that make any difference in your mind to account in any way 
for the fact that you do not see as many now as before ? 

Mr. Senegal. No; it would not account for it at all; because I am 
out on the piers usually every day and I know what is happening 
there, and I know that pilferage at the present time—you can just go 
on the pier and see the difference in the discipline and in the way 
things are being handled now, and there is no doubt about the fact 
that it is now on the decrease. 

Mr. Laws. I just wanted to get your view about it. 

Mr. Senegal. That is my view. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 319 

Mr. Campbell. That is all, Mr. Senecal. That concludes with the 
men that I have from New York who will testify as to the watchman 
service, excepting that a representative of Mr. Bull’s line is on his 
way here, and Mr. Noel for the Munson Line, who knows of the 
South American situation, and I think the committee should hear 
him, because it is a most deplorable condition that exists down there, 
and I think you ought to have knowledge of it, and I want to go into 
the ca$e of the Bull Line just briefly on some of these things that we 
have touched upon. 

I am going to ask one of the rate men, Mr. Ryan, to talk to you 
briefly on the question of ad valorem rates. Before he touches that, 
however, Capt. Blake is here from the port of Baltimore, represent¬ 
ing the Steamship Operators’ Association, an association which is 
composed of the operators of Shipping Board vessels, I believe, and 
I think that the committee ought to hear from the port of Baltimore 
as to what the conditions are there, briefly. Captain, w T ill you make 
it as brief as you can? 

STATEMENT OF MR. W. A. BLAKE, BALTIMORE, MD. 

Mr. Blake. We have not the same condition in Baltimore, of 
course, that there is in New York with truckage and hauling. We ac¬ 
cept freight direct-from the railroad, direct from the railroad docks. 
We have no public piers. The terminals are also controlled by the 
railroads. 

The exceptions are all noted on our receipts to the railroad com¬ 
pany. The pilferage that we have, the stealing, amounts to very little 
with us. Some has been carried on by stevedores, and some little by 
the crew, the riffraff that we have had in the last two years, but that 
is all being weeded out, due to better discipline among the crew and 
also among the stevedores handling the cargo. I do not think the 
amount of pilferage we have will amount to enough to be worth 
speaking of. 

Mr. Campbell. What system of watching do you maintain on 
Shipping Board vessels? 

Mr. Blake. Well, of course, the railroad is liable as long as it is on 
the wharf. As soon as we take it from the ship’s side we have a day 
watchman and a night watchman at the gangway of the ship who 
takes care of anyone leaving with parcels and investigates them. 
During noon hours checkers who are receiving the cargo from the 
railroad are kept in the ship’s hold for half an hour while the other 
half eats, and then the others come back and relieve them while they 
eat. So it leaves a watch on each one of the holds while the cargo is 
being handled. 

When they knock off at night the hatches are put on and battened 
down and covered with tarpaulin, and they remain that way until 
morning. There is very little chance of any pilferage at all in a 
ship, other than what happens when a case of liquor is broken open 
in the hold and some fellow drinks it. He can not carry it ashore, 
but he can drink it, and we have to put in an account for it. 

Mr. Campbell. Where are you operating your steamers? 

Mr. Blake. To the United Kingdom and transatlantic. 

Mr. Campbell. What has been your experience with the volume of 
theft and pilferage losses? 


320 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Blake. What do you mean, as to amount ? 

Mr. Campbell. Yes; either number of claims or amount, in that 
trade. Have they been large? 

Mr. Blake. They have been exceedingly small, from our ex¬ 
perience, the claims that we have had. If 1 had known that I was 
coming here, I could have given you some accurate figures as to the 
amount of claims that have been handled in the last two years. I 
think Mr. Bull has that figured out for his company. 

Mr. Campbell. What is your observation as to whether these 
claims are on the increase or decrease? 

Mr. Blake. Well, they can not help but be anything but on the 
decrease. 

Mr. Campbell. Why? 

Mr. Blake. Well, the discharge of the army practically left the 
scum of the country on this Atlantic coast, and we have had to con¬ 
tend with that element in stevedores and men to man the ships, but 
that is being weeded out all the time. You can discharge a man now 
without all hands quitting. 

Mr. Campbell. Could you not do that before ? 

Mr. Blake,. No; it was impossible. If you discharged one of the 
crew, the whole shooting match would walk ashore, and then it was 
impossible to man the ship out of that particular union. If we 
discharged one of the sailors, not only the sailors but the firemen, the 
engineers, and oilers, and everyone else connected with the ship would 
walk ashore. 

Mr. Edmonds. If you discharged a sailor for stealing, would the 
rest of them go out? 

Mr. Blake. If you discharged a sailor for anything at all, they 
would leave. 

Mr. Edmonds. If you arrested him for stealing, would they all 
get off the ship ? 

Mr. Blake. Yes. We have arrested men for walking off with some 
Shipping Board property, and the judge discharged him. 

Mr. Edmonds. And the Shipping Board ordered the crew back on 
again, did they? 

Mr. Blake,. Well, the Shipping Board put their troubles up to us, 
so far as manning the crew goes—manning the ship. 

Mr. Lissner, In the instance that Mr. Edmonds elicited, where you 
had a man arrested—one of the crew—and he was discharged by the 
court, did the rest of the crew leave the ship because of the arrest of 
this man? 

Mr. Blake.. In this particular case they took some bed linen— 
ticking that goes in the firemen’s quarters—and the man was caught 
in. the act of walking ashore with it. When it came to prosecute him 
the court figured that it was a minor proposition; that the man was 
ignorant and did not know that this property did not belong to him. 
Most all Shipping Board property belonged to whoever wanted it. 

Mr. Lissner. What I have tried to find out and what I have asked 
is, Did the rest of the crew refuse to serve on the ship because this 
man was arrested? 

Mr. Blake. No, sir; not in this case. 

Mr. Campbell. Do you mean to say that a condition ever existed 
when the United States Government did not dare to discharge a sailor 
who refused to obey orders? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 321 

Mr. Blake. 1 es, sir; it existed, and it existed up until the first of 
this year. Not only that, the stevedores also—we have had as high 
as five gangs of stevedores on one ship in one day, due to discharging 
some one of the members. 

Mr. Edmonds. Then you really have no pilferage to speak of. Are 
all your cargoes billed through in good shape? 

Mr. Blake. TV e have some little of it, but the percentage is verv 
small. 15 J 

Mr. edmonds. Nothing like it is in New York? 

Mr. Blake. No ; it is nothing like it is in New York. While one 
witness said, I believe, that the percentage of pilferage from a point 
in Chicago to a point in Europe may amount to practically the same, 
we do not have that condition at all. We receipt for the goods from 
the railroad, from alongside of the ship, which is different from 
where you have to haul it or cart it. 

Mr. Edmonds. Then of course the railroad is liable up to the time 
of delivery. 

Mr. Blake. We give the railroad a receipt and make exceptions 
of anything that is out of order. 

Mr. Edmonds. You are very fortunate in that respect, I suppose, 
because there is no intermediary there to make you trouble. 

Mr. Blake. Yes, sir. 

Mr. Edmonds. How about your hauled freight into the pier? Do 
you have much trouble with that, where you receive from local points ? 

Mr. Blake. We would not get 10 tons of local freight in a year, 
other than is delivered on lighters, or some little cargo that we receive 
that is delivered on lighters. We only receipt from the side of the 
ship, from the lighter. 

Mr. Edmonds. You do not receive freight on your piers? 

Mr. Blake. No freight accumulates on the pier except at the direc¬ 
tions of the railroads, which they are responsible for until they make 
delivery. 

Mr. Edmonds. You load at the railroad pier, then ? 

Mr. Blake. Yes, sir. 

Mr. Edmonds. Is that true of everybody in Baltimore? 

Mr. Blake. It is true of all the shipping companies; yes, sir. 

Mr. Edmonds. I presume you have had the same troubles, more or 
less, that they have had in New York? 

Mr. Blake. We have had some pilferage, especially of milk and 
canned meats and bread, but the percentage is very, very small. We 
never had any contention, and I do not think we have got a claim at 
the present time that is not paid. 

Mr. Edmonds. What kind of cargo do you handle; package cargo ? 

Mr. Blake. General cargo; anything that comes along from a 
pound of biscuit up. 

Mr. Edmonds. That all comes in by rail ? 

Mr. Blake. It all comes in by rail, with the exception of some little 
crushed oyster shells. That is practically the only local freight that 
we get—something of that sort. Everything: comes in by rail. 

Mr. Edmonds. Now, have you anything more, Captain? 

Mr. Blake. No, sir. 

Mr. Edmonds. Gentlemen, have you any questions to ask? 

Mr. Laws. That is a pretty good report, I think. 

60683 — 21 '- 21 


322 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Edmonds. Yes; I wish our Philadelphians would advertise 
Philadelphia as well as the captain is advertising Baltimore. 

Thank you very much, Captain. Now, whom will you have next, 
Mr. Campbell? 

Mr. Campbell. I should like to have the committee hear Mr. Ryan 
on the question of ad valorem rates. 

STATEMENT OF MR. F. A. RYAN, ASSISTANT FREIGHT TRAFFIC 

MANAGER, I. & M. CO. LINES, NEW YORK CITY, REPRESENTING 

THE INTERNATIONAL MERCANTILE MARINE CO. 

Mr. Ryan. Mr. Chairman and gentlemen, I have spent my whole 
business life of over a quarter of a century in the freight department 
of the I. & M. Co., and I suppose I am a horrible example of the 
picture that was painted of steamship men before the hearing yes¬ 
terday. 

Before getting down to explain the rate-making system I want 
to say that I consider it a sound and good business principle for 
every concern to limit its liability. I think I can safely say there 
is not a man in this room that does not limit his liability in some 
way or other, > either his automobile insurance or the liability of 
servants. The courts, in upholding the $100 limitation, evidently 
had in mind the soundness of the principle, and the insurance com¬ 
panies themselves adopt the same principle through their system of 
reinsurance. 

It has been argued by several here that by increasing the rates it 
will not be a detriment or a hardship on the steamship carrier— 
that is, increasing the rates to compensate them for the extra lia¬ 
bility in the event of the wiping out of the $100 limitation; but 
let me outline for you how that possibly will work as a serious dis¬ 
advantage to our mercantile marine fleet. 

I think if the gentlemen that are advocating that change have in 
mind that for the present increasing the freight rates will compensate 
for the additional risk they will find that in a very short time 
through competition that that additional advantage of compensation 
will entirely disappear, and we will then be on the same basis that 
we are to-day. I think quite possibly that might work out that way. 
You have as a competitor of the mercantile fleet, and a very keen 
one, all of the Canadian lines, and it does not by any means follow 
that if the Harter Act is changed the Canadian Government will 
make a like change in their water carriage act. Already the Ca¬ 
nadian lines have a tremendous advantage in the inland rate situa¬ 
tion, and I may say it is a very grave struggle for us here in the 
North Atlantic ports to compete on a favorable basis with the Ca¬ 
nadian lines. Therefore to add further burdens would only tend 
to put American steamers out of the running. 

I think it is safe to say that the bill-of-lading limitation to the 
continent and to Europe fully cover between 80 and 90 per cent of 
the commodities that are shipped, and the remainder would be fine 
goods, which should pay a higher rate and should be covered by 
insurance. 

In making up freight rates there are three or four elements that 
are carefully considered. First of all we must consider the cost 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


323 


of operation; second, the value of the goods,, the weights, and meas¬ 
urements of the goods are also considered ; third, we have brought 
to our minds frequently the foreign competition which a shipper has 
to meet, and for his protection and our own frequently we eliminate 
as far as possible the first two features, namely, operating costs, 
valuation, and so on, and try and place the merchant on a basis 
whereby he can compete with the foreign buyer. Now, it is obvious 
that if you are going to increase the cost of operation you make 
it more difficult for the rate-making bodies to bring in that human 
element of trying to put him on a basis whereby he can compete 
with the foreigner. 

It is my understanding that the chairman of this committee early 
in the hearing stated that he would prefer not to have the remarks of 
any of the shippers challenged, but would rather have those who dis¬ 
agreed make their statement when they came on the stand. I take it 
that it is my privilege to comment on some of those remarks that have 
gone before. 

Mr. Laws made the statement that it was a part of the rate-making 
consideration, in the sense that any line would name an ad valorem 
rate or a rate based upon value. I want to emphatically state that so 
far as the Continental and XT. Iv. lines are concerned—in any case, I 
will say our own line positively—that he is entirely wrong in that 
respect. We always have been ready to fix a rate biased upon value 
and show the value on the bill of lading, which automatically carries 
full responsibility to the carrier for the value shown. 

Mr. Edmonds. Those are not published rates: they are special rates, 
are they not? 

Mr. Kyan. Well, you can not publish a list of rates on that basis, 
because in fact we do not give that discretion to anybody but our own 
office, our main office in New York. 

Mr. Edmonds. Is it hard for a shipper of cargo to get those rates? 

Mr. Ryan. No ; Ave could give them, but we would want to know 
what the conditions were, what the values were, and what the goods 
were; and we could make a rate then that would be reasonable both 
to the shipper and to the carrier. 

Mr. Edmonds. In.making that rate you would accept full responsi¬ 
bility ? 

Mr. Ryan. We would have to, because the value would be shown on 
the face of the bill of lading. 

Mr. Edmonds. You would remove the limitation? 

Mr. Ryan. It would automatically do so. . 

Mr. Price made a statement which I think is rather misleading to 
your committee, because it left the impression—I think he stated that 
flour shipments were frequently left behind, that they did not go on 
the steamer for which they were intended. Now, in the Continental 
and the European trades, flour is not booked for a specific shipment, 
it is the practice of the trade to make an engagement for a specified 
west monthly shipment. For example, booking may be made for 
100 cars west. That means that the steamship companies, knowing 
the difficulty of the shipper in getting stuff to the seaboard m tune 
for any specific steamer, they give them that free latitude to get the 
stuff out from the West in the time over which he has control, and we 
undertake to make it convenient for him in that way, and move the 


324 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

stuff as promptly after arrival as possible. Flour is not booked for a 
specific steamer, and I think I am safe in saying that there has re¬ 
cently at least been no time when flour has been waiting, or any other 
commodity, at the seaboard because of lack of tonnage. 

We have heard several men here express the opinion that this 
condition that we are going through to-day is world-wide. I think 
that is an absolute fact. I think we are suffering from the result 
of demoralization in every line of business and in every organiza¬ 
tion. We in our own organization are continuously prodding our 
own people to keep on their toes. We have drifted back in the last 
•five or six years into a state where people do not seem to have the 
interest that they should, and I think that in time—and it is borne 
out by the statements of those before me—that these pilferages will 
diminish, and I think that in time the situation will automatically 
and gradually remedy itself. But to impose a loss on the carrier 
will not correct the situation; it will not act as a prod for the steam¬ 
ship carriers to employ more care; they are doing that now and they 
need no prod, because of the losses that they have sustained and for 
which they are liable is in itself a sufficient prod. 

Something was said also about giving an “ on-board ” bill of lad¬ 
ing. That question was very thoroughly gone over by special com¬ 
mittees appointed, which held hearings with the bankers and the 
steamship lines in New Tork a short time ago. 

Mr. Campbell. Just explain to the committee what you mean by 
an “ on board ” bill of lading. I question whether they really know 
what you mean by that expression. 

Mr. Ryan. It was mentioned by one of the gentlemen here and it is 
in the evidence, that recommendation should be made that an on¬ 
board bill of lading should be issued by the lines, instead of the pres¬ 
ent form which reads “ Received in apparent good order for ship¬ 
ment.” 

Mr. Campbell. That is what I wanted to get. 

Mr. Ryan. And at that time, after carefrilly going over all the 
conditions, the bankers, whom I think you will agree are mostly in¬ 
terested, recognized that it would be a spoke in the wheel—that it 
would be a clog to attempt to enforce anything of this kind, because 
steamship lines could not give an on-board bill of lading until their 
docks had been cleaned up, or practically the very last hour or two 
before the sailing of the steamer, to make absolutely sure of every¬ 
thing being on board. We made a special arrangement with them 
to cover that feature, showing a desire to cooperate with them, to 
the effect that if there were any banking conditions which stipulated 
that an on-board bill of lading had to be given, that every line—I 
will say practically every line represented in the conference, which 
included all the important lines—would indorse across the face of a 
bill of lading that the goods were actually on board or were not 
actually on board, as the case might have been at the last moment. 
In that way it did not prevent the rank and file of the shippers from 
getting their bills of lading immediately the stuff was delivered to 
the steamer. 

Steamer bills of lading are issued four or five or six days before a 
steamer sails and before the stuff is put on board, enabling a shipper 
to negotiate his documents and get his money, and not lose interest 
for five or six days, which is a very important thing. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 325 

Mr. Edmonds. There has not been very much trouble occasioned 
by that. I imagine? 

Mr. Ryan. No. 

Mr. Edmonds. As a matter of fact. I should rather think it was 
an advantage to the shipper. 

Mr. Campbell. It is a very big question. Mr. Edmonds, in New 
York with the bankers. 

Mr. Edmonds. Do the bankers demand an on-board bill of lading ? 

Mr. Campbell. Yes, sir. 

Mr. Loines. It all started, as we were told by Mr. Hickox, from 
the fact that the French courts had determined that the bill of lad¬ 
ing reciting that the goods were received for shipment was not a 
bill of lading at all, and therefore did not come within the terms of 
the instructions sent to the New York banks to advance sums against 
the bill of lading, insurance policy, etc. 

Mr. Edmonds. That condition is all wiped out now. There is 
plenty of cargo space and everything now. 

Mr. Hickox. I have not heard from any of the banks after this 
flash, as it were, a year and a half ago, that there has been any fur¬ 
ther difficulty, but the whole thing started from just that instance 
that I spoke about. 

Mr. Edmonds. I imagine that the banks when they found that 
part of a shipment was going forward on one steamer and they 
were getting a bill of lading for the whole shipment on that steamer, 
and the rest of it was going on another steamer—I suppose they 
would raise a question on that, too? 

Mr. Hickox. They might. I do not know about that. 

Mr. Edmonds. In other words, the division of a shipment was not 
because of intention but because of lack of space, but you give a 
bill of lading on your wharf on the entire shipment, and then divide 
it up into a coupie of cargoes. 

Mr. Campbell. In instances where that happened I think you 
will find they are very small. Is that a frequent occurrence, Mr. 
Ryan, or is it an unusual occurrence ? 

Mr. Ryan. Well, it has been very infrequent, where the bills of 
lading have been returned to us and have the indorsements made on 
them that the goods were actually on board. 

Mr. Campbell. That is what I am speaking of.* Mr. Edmonds is 
commenting upon the fact that you issue bills of lading showing 
shipment on board a certain steamer, or received for shipment on 
a certain steamer, and part of the goods go forward on that steamer 
and part go forward on another steamer. 

Mr. Ryan. That is very unusual—very unusual now. 

Mr. Edmonds. It was common, though, during the war ? 

Mr. Ryan. Well, yes; but it is to the interest of the steamship 
company to forward lots complete, because of the customs difficulties, 

and so on. . 

Mr. Edmonds. There is no question about that, of course. 

Mr. Ryan. Now, Mr. Laws, I think, made some mention of a bill 
of lading in years past that had no clauses whatever providing for 
a limitation or liability. I have seen copies of bills of lading that 
were in force by our company—I speak from memory—back in 
1876, from some old records that we have there, and those bills of 
lading had a number of clauses just as our present form of bills of 


326 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


lading do; and I think what he had in mind was'full cargoes, which 
at the present day is still the custom, but those bills of lading refer 
to all conditions of a charter party, and that charter party embodied 
practically all the conditions which are enumerated in the regular 
line bills of lading. 

Mr. Edmonds. Was there any change in the bills of lading after 
the passage of the Harter Act? 

Mr. Ryan. Well, that goes a long ways back. I am speaking of 
bills of lading that were on file and were framed in our office. 

Mr. Edmonds. The Harter Act was not passed until 1893. ^ on 

gradually drew these other provisions on it, did you not? 

Mr. Ryan. I would say this—I am now giving simply my own 
views—the claim men are perhaps better qualified to answer that. 
I would say that these clauses were brought on largely for protec¬ 
tion against crooks. There are crooks in every business and the 
lines had to protect themselves under the law against misrepresenta¬ 
tions and sharp practices of peonle who were continually doin<>* that 
sort of thing, and it has been demonstrated that the important lines, 
the regular lines, do not seek to cover themselves behind any screen, 
either in limitation of liability or in time of notice, when claims are 
just. I do not know of anything else that I could put before you 
that will be of interest. 

Mr. Lehlbach. Mr. Ryan, you said at the beginning of your re¬ 
marks, particularly in answer to a question by Mr. Edmonds, that 
where an ad valorem charge for freight was accepted and the true 
value of the package stated in the bill of lading, that then the limi¬ 
tations in the bill of lading were removed. I suppose you referred 
only to the limitation as to the $100 valuation? 

Mr. Ryan. Yes, sir. 

Mr. Lehlbach. Every other limitation contained in the bill of 
lading was applicable just the same? 

Mr. Ryan. Yes; I should say so. 

Mr. Lehlbach. Leakage and breakage, etc.—whatever other limi¬ 
tations were in the bill of lading would still be applicable to that 
shipment; the only change would be the increase in the amount of 
liability ? 

Mr. Ryan. Leakage would hardly be applied for in that connec¬ 
tion, because the present limitation would more than cover the value 
of any goods that are liable to leak, that are being shirred. T do not 
think there are any goods in that class where the value would exceed 
the limitation. 

Mr. Lehlbach. What I mean is that every limitation upon lia¬ 
bility in the regular bill of lading would still adhere to this ship¬ 
ment for which an extra freight charge was paid, except the limita¬ 
tion as to the amount of value? 

Mr. Ryan. Practically so. 

Mr. Campbell. Now, if you will go a step beyond that and issue 
an insured bill of lading, all exemptions would be done away with? 

Mr. Ryan. Well, that would be, of course, a condition that would 
have to be brought up later, as to what extent our insurance would 
cover. 

Mr. Laws. Will you let me ask you a question, please? 

Mr. Ryan. Yes, sir. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 327 

Mf- Laws- You are connected with the International Mercantile 
Marine; 1 ou are the general assistant freight agent of the Inter¬ 
national Mercantile Marine? 

Mr. Ryan. Yes, sir. 

Mr. Laws. And you have rather given me the impression that you 
41 A/r mt T> IeSteC wiP rotectl3 ?g American shipping. Is that right? 

Mr. Ryan. TV hy, certainly. We are running American ships. 

,. ws * toll me what lines does the International Mercan¬ 

tile Marine run? 

Mr. Ryan. The American Line. 

at 1 ’ ^ Aws * many ships are you running now ? 

Mr. Ryan. In the American Line? 

Mr. Laws. \ es; now running ? 

Mr. Ryan. We are running about seven. 

Mr. L aws. What other lines ? 

Mr. Ryan. The Red Star Line. 

Mr. Laws. Is that an American line? 

Mr. Ryan. No. 

Mr. Laws. What line is that? What nationality: what flao- is it 
under? J * 

Mr. Ryan. The Belgian flag. 

Mr. Laws. How many ships are there in that line? 

Mr. Ryan. I can not tell offhand. I think there are four or five. 
Mr. Laws. Now give us the next line. 

Mr. Ryan. What do you intend to develop by that question? 

Mr. Laws. I am asking you for the purpose of developing- 

Mr. Campbell (interposing). It is simply this old saw that they 
have sawed away on so long. 

Mr. Edmonds. I think, Mr. Laws, the committee is.entirely aware 
of that situation, unless you wish to put it into the testimony with 
the idea of developing something. 

Mr. Laws. I want to develop that the International Mercantile 
Marine is not an American line of ships, with the exception of a few 
ships of the American Line. They are all foreign ships. 

Mr. Campbell. Nobody questions that. 

Mr. Edmonds. That has been developed. We have developed that 
down here, and we have had hearings galore on it. There have been 
hearings before the merchant marine, there have been hearings be¬ 
fore the Shipping Board. I have got them all in my office over there, 
and I can bring them over and put them in the record, under the 
affidavit of Mr. Franklin, president of the company. 

Mr. Laws. I did not know that. If the committee is aware of the 
fact that the International Mercantile Marine is not an American line, 

I will drop it. 

Mr. Edmonds. We absolutely know their condition. 

Mr. Campbell. The International Mercantile Marine Co. is an 
American company, and all of its stockholders.are American citizens. 
It o\vns the stock of the White Star and the Red Star and some other 
companies, which in turn own ships that are flying the British flag. 

Mr. Edmonds. In order to save time I will say that was gone into 
very completely and the entire statement was made under oath. It 
is all a matter of testimony on record here, as to all the subsidiary 
companies together with their officers and everything else. 

Mr. Laws. If the committee knows it I am satisfied. 


328 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Edmonds. Unless you wish to develop something new, it is 
useless to waste time on it. 

Mr. Laws. No; I will pass it. Let me ask you another question: 
How many changes, Mr. Ryan, have there been in bills of lading, in 
your bills of lading, of which you have any knowledge, in which the 
size of the bills of lading and the exemptions in the bills of lading 
have been increased? 

Mr. Ryan. Exemptions? 

Mr. Laws. Yes; exemptions, we will say, leakage and all the 
great many exemptions that are in a bill of lading—limitations or 
exemptions. 

Mr. Ryan. I do not think anybody is qualified to answer that off¬ 
hand. That is a question covering a period of years. 

Mr. Laws. Give us your best judgment. 

Mr. Ryan. There is no use of my giving a statement any way at 
all, because it would be misleading. 

Mr. Laws. There have been a great many, anyway, have there not? 

Mr. Ryan. There have been some. I think the major conditions, 
liability conditions, have not been changed. 

Mr. Laws. They have not been changed, but they have been added 
to. Is that not a fact? 

Mr. Ryan. I would not say that offhand; no. 

Mr. Laws. Well, to your knowledge, how many changes have been 
made? 

Mr. Ryan. I would not answer that question by saying of my own 
knowledge, because it would be a misleading answer. 

Mr. Laws. Now, in what instance have you, as a rate-making man, 
reduced the rates for the carriage of any particular article when any 
additional limitation or exemption was put into the bill of lading? 

Mr. Ryan. Did I say that? 

Mr. Law t s. No; I am asking you if it was ever done. You did 
not say it. 

Mr. Edmonds. I would like to get the question. I do not quite 
get it. How have they reduced the rates for an increase in ex¬ 
emption ? 

Mr. Laws, Where the exemptions have been increased or added to 
the bill of lading, have they reduced the rate ? 

Mr. Edmonds. You mean the amount of exemption has been 
raised ? 

Mr. Laws. No; I mean additional exemption placed in the bill of 
lading, whether or not Mr. Ryan has ever reduced the freight rate 
to the shipper because of the fact that the liability of the shipping 
company was thereby reduced. That is what I want. 

Mr. Ryan. What particular instance can you point out where the 
liability has been reduced, and perhaps I can tell you what the effect 
has been ? 

Mr. Laws. I can not do that. I am asking you the general question. 

Mr. Ryan. You are asking hypothetical questions that can not be 
very well answered offhand. 

Mr. Laws. That is not a hypothetical question. 

Mr. Ryan. Certainly it is. 

Mr. Laws. Can you tell? 

Mr. Ryan. That kind of a question with a brief answer, a summary 
answer, is simply misleading. I came here for the purpose of trying 


329 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


to help this committee in giving them information to meet the situa¬ 
tion , now it is only beclouding the issue to ask questions of that kind, 
it seems to me. 

Mr Laws. Now, let me ask you this question— if you can not answer 
it or do not care to answer it. say so. I want to get it on the record. 

Mr RYAN. I Will tell you right now there won’t be any “ yes ” or 

no answer to any question of that kind. 

Mr. Laws Can you tell me, from your experience as the rate-mak- 
mg man tor the International Mercantile Marine, of any instance in 
aa ich you have reduced the freight rate to a shipper on a given 
ai lcle, where at or about that time there has been an additional 
limitation or exemption put in the bill of lading for those goods? 

Mi . Laan. Tweedledee and tweedledum. The same question in an¬ 
other form. 

Mr. Laws. Can you give me an answer to that question? 

Mr. Ryan. I simply answer it as I did before. 

Mr. Laws. That is the best answer you can give? 

Now, you said that the courts had fixed the limit of $100. Is that 
your conception of it, that the courts fixed the limit of $100 in the bill 
of lading? 

Mr. Ryan. No; I did not say that. If I did say that, I want it 
corrected. 


Mr. Laws. Who did fix that limit, as you understand it? 

Mr. Ryan. Under the Harter Act we are entitled to fix the limita¬ 
tion. 

Mr. Laws. I mean who fixed the $100 limitation ? 

Mr. Ryan. The steamship lines themselves. 

Mr. Laws. That, is all I have. I tried to bring out in this point 
that I made, that if we have to absorb the additional liability it would 
soon disappear entirely and we would get back to our present basis, 
and the net result would be an additional burden on the steamship 
carrier. 

Mr. Hickox. Mr. Ryan, aren’t the printed forms of the bills of lad¬ 
ing now in use substantially the same as they were before the war? 

Mr. Ryan. I think so; yes. 

Mr. Hickox. Well, reference has been made to certain “rubber- 
stamp ” clauses that were put on during the war. Did not those rub¬ 
ber-stamp clauses refer to conditions of war alone? 

Mr. Ryan. Practically they were all war clauses, and those have 
all been more or less eliminated now. 

Mr. Edmonds. Mr. Ryan, do you have joint rates in the bill of lad¬ 
ing with the railroads? 

Mr. Ryan. Not a joint rate. For the facility of business we have 
a through bill of lading system which enables the railroad agent or 
the western agent of the steamship line to name the shipper a through 
rate, a combination rate, which rates are shown separately on this 
through bill of lading, the rail rate to the seaboard plus the ocean 
rate to the point of destination. 

Mr. Edmonds. You do not make a rate through from Chicago, for 
instance, to the point of destination in Europe? 

Mr. Ryan. It is virtually a through rate, but divided. 

Mr. Edmonds. A certain portion belongs to the steamship line and 
a certain portion to the railroad company? 

Mr. Ryan. Yes, sir. 


330 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Edmonds. And who does the transferring of that freight, the 
steamship company ? 

Mr. Ryan. No; the railroads in that case undertake to deliver to 
the steamer. 

Mr. Edmonds. To the pier? 

Mr. Ryan. Yes. 

Mr. Edmonds. We had one of those bills of lading*, a railroad bill 
of lading, I presume you would call it, of the New York Central 
Railroad here yesterday, and in that I noticed that there was a clause 
that the rate is subject to whatever terms the bill of lading may have 
at the time of the arrival of that freight at your pier. 

Mr. Ryan. Well, I can understand that. That is possibly for some 
out of the way place on which there is no regular service. 

Mr. Edmonds. There seemed to be a complaint on the part of the 
shippers yesterday that they did not know what kind of a bill of 
lading they would get from the shipping company. Would it not be 
possible, with Chicago only 24 hours away, that your agent in Chi- 
cago could be informed as to what kind of a bill of lading they were 
subjecting themselves to when they delivered those goods to the 
railroad ? 

Mr. Ryan. Absolute^, and if necessary, when making his booking 
with the Chicago agent—if it was in Chicago—he could demand 
from that agent that a copy of the local bill of lading be attached 
to that contract. 

Mr. Edmonds. But is your agent in Chicago not in a position to 
guarantee that the bill of lading that he might have in Chicago would 
be the bill of lading that the shipper would be subject to Avhen he 
arrived at New York? 

Mr. Ryan. Certainly. 

Mr. Edmonds. They claim not. They claim that they do not know 
what the bill of lading is. Now, assume that this morning a shipper 
went to your office in Chicago and said, “ What kind of a shipping 
bill of lading have you got?” They say, “ Here is the International 
Mercantile Marine bill of lading. We are going to ship your goods 
on the International Mercantile Marine, and here is the bill of lad¬ 
ing.” Now, he looks at the railroad bill of lading, and what does he 
find? He finds that if you, during the day or during the progress 
of those goods to the seacoast, choose to put in a new limitation or a 
new item or a new clause in your bill of lading that might be detri¬ 
mental to him, he would be subjected to it. Now, could you not in 
some way arrange to have your agent in Chicago guarantee that the 
bill of lading which he showed the shipper would be the bill of lad¬ 
ing that he would have? 

Mr. Ryan. Absolutely. That is sound business. We would not 
hesitate a minute to give a shipper a copy of the current bill of 
lading. 

Mr. Edmonds. But would you guarantee that when his’goods ar¬ 
rived in New York that that is the bill of lading he would be sub¬ 
ject to? 

Mr. Ryan. If he made a shipment on a through bill of lading, 
that through bill of lading provides that it is subject to all the 
terms and conditions of the local bill of lading in use at the time 
the shipment is made, and I think it would automatically mean 
that the date of the through bill of lading would govern the con- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


331 


ditions of the local bill of lading which are in force on the day on 
W 7 V/T ^ trough bill of lading is signed. 

r r , 1 ' Edmonds That is not true in terms of the bill of lading. 
1 he railroad bill of lading that the man gets for his goods says 

point blank, that it is subject to the bill of lading that may be 
m effect on the date of the shipment when it leaves New York. 
1 hat does not seem good business to me. I think that is a thing that 
you cum correct so easily that it ought to be done. 

Mr. Ryan. Mr. Chairman, I think that feature has been well 
covered m a through bill of lading, which has been gone over by 
committees of various trade associations and steamship lines, and 
filed with the Interstate Commerce Commission. 

Mr. Edmonds. But not in effect yet? 

Mr. Ryan. No, sir; it is under consideration by them before final 
approval. If I remember rightly, that bill of lading says—it enu¬ 
merates all the conditions, and it simply says that the shipment is 
subject to the terms and conditions of the local form of bill of 
lading not inconsistent therewith. Isn’t that the wording of it, Mr. 
Hickox? * 

Mr. Hickox. Yes; I think so. 

Mr. Ryan. Not inconsistent with the rules which are printed on 
that bill-of-lading form. 

Mr. Edmonds. In that case the man in the interior would be able 
to know that the provisions were not going to be changed. 

Mr. Ryan. Practically he has every protection now. 

Mr. Edmonds. The situation in that man’s mind, particularly if 
he is not very conversant with the shipping business, is that he may be 
subject to any kind of condition when his goods arrive at New 
York, and it is a very poor business proposition for the steamboat 
companies to allow that kind of impression to get into a shipper’s 
mind. 

Mr. Ryan. Absolutely. That is one of the things which I want to 
strive to get into the minds of this committee, that the steamship 
organizations of New York are for upbuilding business and are along 
reasonable lines. You have heard these other men preceding me speak 
on the questions of claim. They have waived all the technical re¬ 
sponsibilities. I suppose they had in mind the case where some one is 
a crook and tried to put something over on them, and then they might 
use the technical limitations on the bill of lading, but not otherwise. 
We run our business along reasonable lines. We try to see the other 
man’s side of it always, and when a shipper can do business it is busi¬ 
ness for us, and naturally we have got to encourage that. 

Mr. Edmonds. It is good business for you, but we had representa¬ 
tives here and they showed one of these long bills of lading of the rail¬ 
road where in big type on the bill, the biggest type there, it was 
stated that they were not responsible for anything that you had done. 
It leaves a doubt in the mind of the shipper right away that the boat 
company is going to do something to him, and that is the doubt that 
you want to remove. 

Mr. Ryan. We have been striving—of course, we have had chaotic 
conditions during the war, but we have been striving to change those 
conditions on the through bill of lading and go over them very care¬ 
fully and rectify them, and I think that probably Mr. Campbell may 


332 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


make some remarks, some reference to that bill of lading, which now 
has been filed with the Interstate Commerce Commission. 

Mr. Edmonds. Is this through bill of lading going to provide that 
you will be able to take something at the point of origin here in this 
country and deliver it in London or Liverpool or somewhere in 
Europe ? 

Mr. Ryan. It is gotten up with the view of applying it, if possible, 
to any trade to any port. • 

Mr. Edmonds. From an interior point to an interior point ? 

Mr. Ryan. From an interior point to the seaboard, and then beyond 
into an interior point on the other side. 

Mr. Edmonds. That would put you in the same position as the 
through carrier, with the exception that you do not guarantee any¬ 
thing all the way through. But how far would the bill of lading go 
in regard to the responsibility for liability, the loss ? 

Mr. Ryan. You mean beyond the steamship line? 

Mr. Edmonds. The railroads here have got to accept their full lia¬ 
bility in case of loss; your companies then take the cargo out and 
then you have to assume full liability of loss, or insure for it, or some¬ 
thing or other, or you have got to put in the bill of lading some limi¬ 
tations of liability to take it over to the other side; then again put it 
on another railroad over there, and I presume the laws of that country 
would require that railroad to assume some liability ? 

Mr. Ryan. That is one of the great difficulties, the connecting car¬ 
rier beyond the steamship line, and I do not believe that there is any 
way that you can cover that. The most we can do is to offer the- 
facility of carrying the goods to destination under the terms and con¬ 
ditions of the carrying line and subject to the local conditions at the 
port at which it is delivered ultimately. 

Mr. Edmonds. Will it put them in a position to go in and compete 
with the Germans for trade, the way they are handling it? 

Mr. Ryan. The best way to find that out is to try it, Mr. Chair¬ 
man. We are trying to find a way to do these things and this is the 
best that we could bring forth up to the present time. 

Mr. Edmonds. Now, you are going to take goods, we will say, into 
Peru—you do not go there, I suppose, but we will suppose you do 
go there—you know the conditions because you have heard them, 
and so have we all heard them. You have got the question of un¬ 
loading into lighters, which is part of your through bill of lading; 
you have got the question of going through the customhouse, which 
is a part of your through bill of lading; you have got the question 
of going onto a strange railroad in a strange country under strange 
laws, which is a part of your bill of lading—until delivery some¬ 
where up in the mountains. 

Mr. Ryan. I can only say for the lines that we connect with that 
we would confine our operations almost wholly to concerns that we 
would consider reliable and responsible and who would deal with 
matters of that kind along just lines: and I suppose every operating 
line to South American ports would take the same precautions. 

Mr. Edmonds. I suppose you would have to do that, because other¬ 
wise you could not guarantee anything under the through bill of 
lading. 

Mr. Ryan. It is to our interest to take care of the shipper’s inter¬ 
ests when the goods get beyond our line. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 333 


* Hlc ? cox - Mx\ Ryan, you have had a through export bill of lad¬ 
ing ever since 1899 in this country, have you not? 

Mr. Ryan. Yes. 

Mr. Hickox. And hasn't it worked pretty well? 

Mr. Ktan. Yes; there has never been, so far as I know, any seri- 
ous complaint with it and it has been found of very great use to 

When rn ttf h ?u pels ' n bn Wa ! , de , sl S ned entirely for their convenience. 
When the through-bill-of-lading system was stopped by the rail¬ 
roads for a time when commercial business was still carried on. it 
tv as round to be a great hardship and, of course, when nothing was 
moved excepting war goods and war materials and all commercial 
shipments were stopped, it did not make so much difference; but for 
a long time after the commercial shipments again moved we could 
only apply local bills of lading, and the pressure was so great from 
the shippers that finally Mr. Spence, who was then head of the Rail¬ 
road Administration, simply put his foot down and demanded that 
something be done at once to restore that through-bill-of-ladin^ 
system. & 


Mr. Edmonds. This new through bill of lading? 

Mr. Ryan. No ; it was not a new one. He restored practically the 
old one—its old form. 

Mr. Edmonds. But this new one proposed now; is this a better 
bill of lading? 

Mr. Ryan. Well, it contains certain modifications in the clauses 
to meet the views of the shippers and the changed conditions. Is not 
that right ? 

Mr. Hickox. I think so. 

Mr. Edmonds. Would it be attractive to the shippers? 

Mr. Ryan. I think Mr. Hickox can probably explain that more 
fully. He has got copies of it there and can show that the various 
trade bodies practically accepted it with certain minor objections, 
and certain sides of the case are now before the Interstate Commerce 
Commission. 

Mr. Edmonds. They entered into this subject? 

Mr. Ryan. Yes; they held several hearings on it, one in Chicago, 
one in Washington, and one in San Francisco. 

Mr. Hickox. I do not think they held one in San Francisco. But I 
will give you a copy of that a littie later. 

Mr. Edmonds. We would like to have that. I am very much inter¬ 
ested in through bills of lading. I have watched the German system, 
and I would like to see it put into effect if possible here. 

Mr. Campbell. Wherein does your system differ from the German 
system? I think we might hear about that, because we have the 
traffic manager of the United American Lines here, who can tell you 
all about that phase of it. 

This is going far beyond any investigation of theft and pilferage. 

Mr. Edmonds. It enters into the making of the through bill of 
lading, Mr. Campbell. That is the reason we are taking it up. 

Mr. Campbell. I am very glad to have you do it. 

Mr. Edmonds. It is a question of liability in connection with a 
through bill of lading. The questions of liability expressed in the 
views here are rather difficult, and to say the ieast the Germans 
would still have the edge on you in making a through delivery and 
guaranteeing that delivery; and as one gentleman said this morning, 


334 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


you ought to be able to place your responsibility somewhere in order 
to get a through bill of lading to compete with theirs. 

Mr. Ryan. You never will do it, Mr. Chairman, by imposing addi¬ 
tional burdens on the steamship carrier. If he has got any latitude* 
at all in his earnings over and above his operating expenses, then 
he has got some slack which he can take up to meet those foreign 
conditions—competitive conditions. Therefore, instead of imposing 
additional liability on the ocean carrier, it should be lessened, just 
for that purpose. 

Mr. Edmonds. Would that not lead to a great loss of trade for the 
steamship companies, and a corresponding increase in trade by the 
company that does give the guaranty ? 

Mr. RyIn. Well, I do not know. I think that is one of the condi¬ 
tions which to a large measure will have to be left to the transporta¬ 
tion lines. It is a problem for them to work out. They are just as 
keen to develop those trades as the Germans are, and I think that 
we can match up with the Germans any time. 

Mr. Edmonds*. Yes; but I am trying to advance the thought here 
that those things have got to be looked into, and if you are going to 
get the trade, you have got to meet conditions. We are just as keen 
to do that as anyone could be. 

Mr. Hickox. Mr. Ryan, on this question of the giving of increased 
liability for an increased freight rate, which you have described, is 
that process followed substantially by all the principal lines trading 
in New York? 

Mr. Ryan. You mean as to whether they would issue a bill of 
lading including the liability? I do not hesitate in saying for all 
the continental and United Kingdom lines, which practically covers 
the whole North Atlantic, South Atlantic, and Gulf lines, that they 
would do that. 

Mr. Campbell. But do the shippers want that? 

Mr. Ryan. Only on very rare occasions. I do not call to mind a 
single case where we have been asked to put the value on the bill of 
lading; 

Mr. Rush. Mr. Ryan, I am very much interested in what you say 
about that special valuation clause. Does the International Mercan¬ 
tile Marine do any volume of trade in that valuable stuff? 

Mr. Ryan. I think 1 stated that, roughly, I thought that between 
80 and 90 per cent of the cargo carried was of the character of goods 
which are now covered bv the liability as shown in the bill of lading, 
$100 to $150. 

Mr. Rush. And the other 10 per cent might be this more valuable 
stuff ? 

Mr. Ryan. The other 10 or 20 per cent might be higher grade. 

Mr. Rush. Can you give me any idea as to what rates you charge. 
New York to Liverpool, based upon value? 

Mr. Ryan. I would undertake to make a rate which would be com¬ 
mensurate with the risk incurred. 

Mr. Rush. Can you give me any idea what it is? 

Mr. Ryan. I would have to figure it out. I would do it in this 
way: I would, first of all, consider what the cost would be to me to 
cover that with insurance—and I still maintain it is good business 
to cover your extra risk. Every business must have its limit of 
liability, but for convenience to a shipper, if he demanded the full 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 335 

valuation.on the bill of hiding, I would undertake, first of all, to see 
wliat the insurance company would charge me, and I would base the 
rate on the additional cost that I would have to pay the insurance 
company. 1 • 

Mr. Rush. And that may vary in accordance with the kind of 
~ u PP e(1 - There would not be any uniform rate? 

Mr. Ryan. Yes; you can not make it uniform. 

Mr Rush. One thing more I would like to ask regarding this re¬ 
duced liability. Of course, that has been comparatively recently 
legalized, as I understand it. Did not these various steamship owners 
operate on a very much larger liability prior to these recent decisions 
and still get away with it? 

Mi. Ryan. I do not know offhand when that change was made, 
either reducing or increasing. As a matter of fact, I can not tell* 
you from memory how long the $100 or $150 limitation has been in 
force. 

Mr. Rush. It has only been upheld recently. I believe. 

Mr. Ryan. I think it has been held for a long time- 

Mr. Rush. I mean 20 or 25 years ? 

Mr. Hickox. It was in 1884! 

Mr. Rush. But they used to operate under it before it became 
a law, and were still able to operate steamships at a profit? 

Mr. Hickox. The decision of the Supreme Court on the subject 
was rendered in 1884, in Hart against Pennsylvania Railroad. 

Mr. Rush. But before that they operated steamships at a profit on 
the higher valuations? 

Mr. Campbell. British steamers, because you had no American 
steamers. 

Mr. Rush. We did have a very large merchant marine in 1860 and 
prior to that. The British were able to get along with a full liability 
bill of lading. That is the point I want to bring out. 

Mr. Campbell. But for entirely different reasons. Why did it 
disappear? 

Mr. Ryan. Mr. Laws has asked other people something about 
carrying the full liability. He did not ask me that question. I was 
hopeful that he would. T do not know how our people would take 
that. It is a question, as the other members have stated, for the di¬ 
rectors or the managers of the company to decide. 

Some years ago we brought out four or five up-to-date freight 
steamers—a good many years ago—and the insurance underwriters 
demanded the same rate of insurance on that type of boats that they 
did on a lot of old hookers that were then used in the freight-carry¬ 
ing trade. We pleaded with them that it was not a fair proposition 
to put the same rate of insurance on our boats, which were up to date 
in every respect, as on some of these old hookers, and we could not 
move them. They sat back in their chairs and smiled and said, 

“ We are sorry, but the rate is the same on every line, every steamer.” 
Based, I suppose, on the theory that the insurance companies fix 
their rates for this year based on last year’s losses, and so on. So 
that in that case I do not see that the insurance companies take any 
great risk. At that time we said, “All right, we will go into the in¬ 
surance business ourselves.” And we did. I think we built two ships 
in a very short time out of the premiums that we saved, and if you 
will ask my opinion—I do not know how our company will take it. 


336 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

but if this Harter Act is changed and the full liability is placed on 
the steamship carrier, I for one will not only personally recommend 
but urge that we take on the full insurance risk. It is a logical 
sequence. 

I do not offer that as any threat. Do not misunderstand me. It is 
simply a statement that I want to place in your mind. 

Mr. Laws. You can not scare me at all. If you think you are scar¬ 
ing me, you are mistaken. 

Mr. Ryan. Well, that is what happened, and I think personally I 
am in favor of coupling up transportation with insurance. I think it 
is a good thing. 

Mr. Laws. Then we are riot so very far apart. 

Mr. Ryan. Not at all. I do not know whether our directors view 
that in the same light or not. Ido not know that. 

Mr. Laws. Just between us, you are an inexperienced man- 

Mr. Ryan (interposing). Now, I do not want any more of these 
hypothetical questions. 

Mr. Laws. Do you know of any sound, good, moral business reason 
why a steamship company that is paid to carry goods should not 
assume and be liable for the full loss of merchandise by theft, pilfer¬ 
age, and nondelivery, where it is shown legally and properly in the 
courts that that loss resulted from the negligence of that particular 
carrier ? 

Mr. Campbell. No; and under the law you can recover in every 
case on your statement of the facts. You know it. 

Mr. Laws. If lawyers agreed we would not be practicing law. 

Mr. Campbell. You have stated a case that would absolutely in¬ 
sure recovery in any court. 

Mr. Ryan. Let me answer that by asking you another question. 
What is the object of the insurance company? What do they do? 
What are they brought into being for ? 

Mr. Laws. I will not answer your question until you answer mine. 

Mr. Ryan. That answers your question. 

Mr. Laws. If that is your answer to it, all right. 

Mr. Ryan. I would consider it an answer. 

Mr. Edmonds. Are there any more questions, gentlemen? If not, 
we will excuse the witness. 

Mr. Campbell. Mr. Chairman, we have the traffic manager of the 
Munson Line, and also of the United American here. Their testi¬ 
mony will be very largely cumulative in character, excepting that 
the traffic man for the United American Line was, prior to the war, 
in the service of the Hamburg-American, and he can tell you some¬ 
thing of that German situation if you would like to know it. Other 
than that I suggest their testimony would be simply cumulative 
along that line. 

Mr. Edmonds. Let him tell us about that. We would like to hear 
what you know about the German situation. 

STATEMENT OE MR. J. E. WALDORF, CHICAGO, ILL. 

Mr. Campbell. You told me before we came in here that you knew 
of the German situation with respect to through bills of lading, as I 
understood you. 

Mr. Waldorf. I told Mr. Herrick. 

Mr. Campbell. I want you to tell the chairman. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 337 


Mr. Waldorf. Mr. Herrick made the statement that in making a 
contract in Chicago the contract provided that the conditions of 
the ocean bill of lading would apply; also that when he made a con¬ 
tract for shipments, particularly to Hamburg, the conditions of the 
connecting line applied, and he said he could not get the bills of lad¬ 
ing—he could not see the bills of lading that applied against those 
contracts. I want to say that our Chicago lines have not only our 
ocean bills of lading but also copies of the connecting line bills of 
lading in their possession. 

Mr. Edmonds. What he said was this, that he had no assurance 
when the shipment arrived at the port of New York that it would be 
subject to the bill of lading you had on file in your Chicago office. 

Mr. Waldorf. Our contract covers the shipment; the contract says 
the bills of lading in force apply on that. 

Mr. Edmonds. Yes; but the bill of lading the railroad company 
gives does not. 

Mr. Waldorf. I think he could hold us on our contract. 

Mr.. Edmonds. It is possible he could; but he said his situation was 
that he had to take the bill of lading of the railroad, and in large 
type—he had one of them here and he showed it to us in large type 
where it said, “ Subject to the bill of lading of the steamship com¬ 
pany over which it is to go at the time of shipment.” 

Mr. Waldorf. That may be true. 

Mr. Edmonds. If you would give him assurance at your Chicago 
office that anything shipped under that bill of lading would be 
accepted, I think you would clear up the trouble, and I imagine it is 
good business for you to do it. 

Mr. Waldorf. I certainly would say the Chicago office would stand 
back of the contract they have issued: That contract says that the 
bill of lading in force on that date applies, regardless of what they 


may say. 

Mr. Edmonds. You may have a bill of lading in the railroad, and 
the man signs the bill of lading of the railroad, but he is a little 
troubled when his conscience gets to work and he wants to know where 
he stands; and if it is changed—it is not possible to change a bill of 
lading in four or five days, anyhow ? 

Mr. Waldorf. No. 

Mr. Edmonds. So you can very easily have the man with whom you 
issue the bill of lading remove that objectionable clause and say, 
“ Subject to the form of such and such a bill of lading. 

Mr. Waldorf. I think, if it would satisfy Mr. Herrick, we would 
be willing to say our contract would apply regardless of that pro¬ 
vision. _ T ... . • 

Mr. Campbell. Do not overlook the fact Mr. Herrick is shipping 
with the Triangle Steamship Co. and that class of operators. 

Mr. Edmonds. You were going to tell us a little something about 
how the Germans handle their bills of lading. Have you any idea 

about that ? . . ^ t • 

Mr. Waldorf. I do not know anything about the Bremen Line 


conditions. , 

Mr. Edmonds. What do you know about their through bill ot lad 

ing_the German system of issuing a through bill of lading which 

o-ua ran tees arrival at the inland port in a foreign country? 


60683—21 - 22 


338 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Waldorf. I do not know anything, 

Mr. Campbell. Before the war, were you in the service of the 
Hamburg-American Line? 

Mr. Waldorf. I was with the Hamburg-American Line before the 
war; that is true; but as for through bills of lading from the interior, 
I do not think very many of those bills of lading were issued. I 
think the shipment originating in the interior was usually controlled 
by the forwarding agent, who carried the stuff from the interior to 
Hamburg, and there a through bill of lading was issued from Ham¬ 
burg to most anywhere in the United States. 

Mr. Edmonds. It has been published in some of the reports of the 
Commissioner of Navigation that the Government owned the rail¬ 
roads in Germany and the Government was interested in the steam¬ 
ship lines in Germany, and in their advancement, and the only ques¬ 
tion that came up in my mind was what they did at the other end 
when they got to places like Peru and Mexico where theft and pilfer¬ 
age were going on. But they did issue a through bill of lading from 
the town in Germany all the way to the point of destination. That, 
I think, was in the 1909 report of the Commissioner of Navigation. 
And I presume they are doing it to-day, but I wanted to know how 
they overcame the loss that was occasioned and must be occasioned 
with their goods in the customhouse, and so on, in South America— 
unless they purchased their way through the customhouse and the 
railroads down there to protect their goods. That is the thing I am 
interested in particularly. 

Mr. Waldorf. I do not think I can answer that question, but I 
think they would be up against the same condition as everyone else 
when it comes to delivering goods; that is, to the small points in 
South America. 

Mr. Edmonds. These merchants testify the} 7 get German goods but 
they do not get our goods. That is a very unfortunate situation and 
we ought to find some way of correcting that. 

Mr. Waldorf. Roughly, the condition now- 

Mr. Campbell. That must have referred to the condition before 
the war, because the Germans are not doing anything down there now. 

Mr. Edmonds. They are doing too well to suit me from the last re¬ 
ports I get- They are growing by leaps and bounds. It is rather a 
hard thing to believe, but the reports show that. 

Mr. Campbell. Do you care to hear from Mr. Kellogg? It is simply 
cumulative. 

Mr. Edmonds. Just let him confirm the statements as he goes along. 
We do not want to have a duplication of testimony, and if they handle 
the freight exactly the same as the International Mercantile Marine, 
say so, and if their checking system is the same, say so, and we will 
know what that is. 

STATEMENT OF MR. CHESTER B. KELLOGG, NEW YORK, N. Y., 
FREIGHT TRAFFIC MANAGER, MIJNSON STEAMSHIP LINE. 

Mr. Kellogg. I want to impress strongly upon this committee that 
we believe we are servants of the shippers, in that we make every 
endeavor to protect the shipper as far as possible. Now. we naturally 
do protect ourselves on our liability in our bill of lading, because that 
is the basis on which we get our living and, therefore, we do protect 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 339 

ourselves to a great extent under that liability. It also protects us 
against crooked methods which we are bound to run up against, 
there is plenty of it among the shippers, but it is not general. The 
supping public in general are very good, but we do run up against 
it and we need protection. 

Now 7 , it seems rather peculiar that the insurance companies should 
be lieie rapping the steamship companies. It seems to me there must 
ie a leason tor it that those insurance companies have run up against 
losses they had not anticipated, brought about by conditions vdiich 
weie caused by the letting down of the morale. It is a matter that 
is well known everywhere among the manufacturing interests in this 
country, as w 7 ell as overseas and everywhere else, and it is also Avell 
known that that thing is fast correcting itself. 

There was no great demand for ad valorem rates prior to 1914. 
That demand came when the insurance companies began to advance 
their rates to a prohibitive basis. Now we are whiling to protect the 
shipper on the ad valorem value and do do it, both to South America 
and to Cuba. 

The steamship companies have been accused of discrimination. I 
w 7 ant to say that the insurance companies discriminate against Ameri¬ 
can ships—good American ships—and refuse to give rates to Ship¬ 
ping Board boats that are good steamers, classed 100-A-l. 

Now, there is no use taking up a contention here between the ship 
companies and the insurance companies, because there should be 
cooperation betv r een them—there ought to be cooperation between 
them. If. as you might infer here to-day, these insurance companies 
want to clear this thing up, so that there will be no risk, what is the 
use of an insurance company'—why the necessity of an insurance 
company ? 

Mr. Edmonds. I think, Mr. Kellogg, I should state to you, whicli 
possibly you do not know, that it was our committe that invited 
the insurance men here. I do not think they made any request to 
come here particularly. As a matter of fact, t think if they had had 
their way they would have come dovm in October rather than now. 

Mr. Kellogg. Yes; but I was rather surprised at the attitude they 
have taken. 

Mr. Edmonds. The committee was not aw^are what attitude would 
be taken. We were aware of the losses that were occurring and were 
also aware through the public press of the increasing rates, and were 
also aware of the fact it stood against our making sales, particularly 
in South America. 

Mr. Kellogg. It seems to me the question is one of where we are 
now. It is the water that has gone over the dam that has caused the 
trouble. It is the question of the great volume of goods that were 
sent out of this country during 1919 and 1920, which caused conges¬ 
tion in all these ports. And another thing, oijr shippers are suffering 
a great deal from having shipped by other lines that were not regular 
in their trades, because the regular lines knew that they should 
handle only a certain amount of freight. Now^, it was to the interests 
of the shipper himself and to the interests of the consignee to limit 
overcarrying in order to protect the interests of everybody. In our 
Cuban trades w^e never booked am^ freight from June until October, 
1920, but that does not mean we stopped our steamship service. That 
means we w 7 ere carrying freight vdiich had been booked by the ship- 


340 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

pers who had not known their ability to ship for the past six months. 
They booked with us for certain steamers and the freight never ar¬ 
rived, because of the manufacturing conditions in this country, and 
as a result we stopped om* facilities and used our facilities to take 
care of old bookings gradually, to keep our terminal facilities from 
being blocked up, simply because the terminals in Cuba were not 
able to take care of it. Then the shippers took whatever ships were 
offered them for Cuba, whether regular line or not, and some of 
these spasmodic lines went in there and made representations to 
them they were able to take care of the situation, and they were not 
able to handle the situation; they had no terminals, although they 
said they did have terminals. And those are the conditions which 
brought about this chaotic condition; those are the things that made 
the insurance companies so interested in this question of liability, 
because they have suffered losses. We, too, have suffered losses. 

Mr. Edmonds. It got to be an alarming condition when the insur¬ 
ance companies refused altogether to take insurance to certain points. 
It was certainly going to injure our trade when they could not get 
insurance, and no shipper, under your bill of lading, would care to 
make a shipment unless he did get insurance. 

Mr. Kellogg. I want to say we have found the shippers are taking 
them, those that are willing to ship cargoes, and we find more ship¬ 
pers offering cargoes, and even the old shippers coming back are 
willing to take them, and they are coming to us and asking for 
ad valorem rates where the goods are of high value now, as compared 
with prewar. 

Mr. Campbell. Do your customers object to your bill of lading? 

Mr. Kellogg. I have not heard of any objection from them at all. 
We have offices in Chicago; St. Louis; Philadelphia; Baltimore; 
Mobile, Ala.; and New Orleans, and information can be gotten 
through those offices as to what our rates are and they can have our 
bill of lading and all the information necessary for making a 
thorough shipment. 

Mr. Edmonds. What is the condition of affairs down in South 
America to-day? 

Mr. Kellogg. They are slowly clearing up. The situation in South 
America is there are a great many goods that have not been received, 
for this reason—that those goods arrived there after the break in 
prices, and then the financial conditions became so acute there that 
it tied up the whole situation. There were goods bought on values 
far beyond the present market values. Now, if the consignee can get 
out, he is going to get out. The merchants of this country sold goods 
a year and a half ahead, and before the year and a half was up, in 
the line of textiles the prices had dropped and they were urging the 
steamship companies to push this stuff out, to get it out of the coun¬ 
try. They wanted to get their bills of lading in bank and get their 
money. They were very strict at that time about giving credits; 
they asked for letters of credit to be placed in the banks here so that 
they could get their money, and now the banks are coming back to 
them because their drafts have not been accepted at the other end. 

Mr. Edmonds. How about your pilfering in the case of those goods; 
have you had much loss? 

Mr. Kellogg. That is a question Mr. Knowles is acquainted with, 
because he handles that portion of it at the other end. Now. the 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 341 

question has been brought up about these changes in bills of lading. I 
have been with the Munson Line for 22 years, and I do not know 
of any clauses that were in any way changed to lengthen the bills of 
lading to any appreciable degree. I do know we have improved the 
bill of lading; we have made it larger and made the print larger 
and made more space for listing the cargo in those bills of lading, 
because there is more miscellaneous cargo going. 

Mr. Edmonds. I could not read the bill of lading the other night, 
because I did not have my reading glasses; I do not know what the 
shipper must have done when you had the other one. 

Mr. Kellogg. The others were very bum. This one can be read, 
but the others were very bum. Now, as to the question of changing 
the conditions of the bill of lading for 20 years back. The world 
has been growing; we are'exchanging more valuable goods, more 
high-class goods, between one another than we used to exchange. 
That is one reason for the difference of the liability and sticking to 
it closer than we ever did before. 

Mr. Edmonds. That advance is more in price than in the carriage 
of the goods. 

Mr. Kellogg. And in the volume of goods shipped. 

Mr. Edmonds. No; in the price of the goods shipped. 

Mr. Kellogg. Yes; and in the volume of goods shipped, generally 
speaking. 

Mr. Edmonds. Lloyd’s Annual claims the amount of interchange 
last year was only 35,000,000 tons; that is the amount of shipping 
that could be used. It was 35,000,000 tons as the maximum inter¬ 
change last year, and the year before we had 45,000,000 doing the 
same work. 

Mr. Kellogg. I was talking about the volume of high-class 
goods—the volume of goods exceeding the valuation of $100 per 
package. 

Mr. Edmonds. That has happened, however, without you increas¬ 
ing your liability at all; you still hold your liability down to $100 
per package. 

Mr. Kellogg. But the contention brought up here was that before 
the Harter Act the steamship companies made money without that 
protection. . . 

Mr. Edmonds. The only steamship lines, I think, we had running 
were one or two that got‘the postal subsidy, were they not? 

Mr. Kellogg. You mean as far as American lines are concerned ? 

Mr. Edmonds. Yes. The committee is simply on a searching ex¬ 
pedition; that is all. We want you to tell all the story you think 
would be interesting to the committee in regard to this liability 
question. It may be possible before very long we will be called 
upon to pass upon an amendment to the Harter Act. proposed m 
the Senate, and we would like to know something about the situa¬ 
tion before we take that matter up. . , . 

Mr. Kellogg. We should not consider it was right for us to take 
(roods that might be valued anywhere from $10,000 to $20,000 and to 
ask the same rate of freight on them that we would on goods valued 

at $100. , . 

Mr. Edmonds. I do not think you are doing anything wrong in 

asking additional freight rate on that. 


342 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Kellogg. There is a great variation in the values of those 
things. You take the silks. They all vary in price. One case of 
silks might be worth only half of what another case of silks would 
be worth. 

Mr. Campbell. Mr. Kellogg, how frequently do you have appli¬ 
cations made to you by shippers for the deletion of the release val¬ 
uation clause and for a declaration of the invoice value of a higher 
value ? 

Mr. Kellogg. I could not give the number of the bills of lading, 
but it has increased recently quite rapidly, on account of the in¬ 
creased insurance rate which the brokers charge. We get consid¬ 
erable of it on boots and shoes, textiles to South America, and boots 
and shoes to Cuba. 

Mr. Campbell. Have you ever refused that to the shipper? 

Mr. Kellogg. No. In fact, we do differently than the trans¬ 
atlantic ; we carry the rate right in our tariff and any of our agents 
can quote it. 

Mr. Campbell. For instance, on a deleted limited value clause to 
Habana, what would be your increase in the rate? 

Mr. Kellogg. At the present time it is per cent beyond the reg¬ 
ular freight rate. 

Mr. Campbell. Two and one-half per cent beyond? 

Mr. Kellogg. Two and one-half per cent. 

Mr. Laws. On the ad valorem? 

Mr. Kellogg. On the ad valorem. That rate is based rather high, 
to Habana on account of the fact that we take care of the handling 
charges of the wharf, the wharfage charges, and deliver to the 
carts of the consignee. That is a custom which is carried out in 
Habana. 

Mr. Edmonds. Do you carry that through the customhouse, too? 

Mr. Kellogg. We carry through the customhouse, but we lose con¬ 
trol of it to a great extent in the customhouse on account of the fact 
it is a customhouse, bonded, and carried on by the customhouse, 
officials. 

Mr. Edmonds. Is there any pilfering down there in the custom¬ 
house? 

Mr. Kellogg. There was a great deal of pilfering down there in 
the customhouse during the congestion, but the Habana docks are 
fairly well cleared up now and that is under control. 

Mr. Edmonds. You can watch it all the time, unless they have a 
bonded warehouse. 

Mr. Kellogg. The docks we go to are controlled by us, as far as 
they can be controlled under the Cuban law. 

Mr. Edmonds. The customhouse warehouse is right down at the 
docks in Cuba ? 

Mr. Kellogg. Yes, sir. 

Mr. Edmonds. Is that true farther south? 

Mr. Kellogg. Mr. Knowles can testify to that: I can not answer 
as to that. 

Mr. Campbell. Prior to the war were the freights in the trades 
in which you were engaged on a competitive basis ? 

Mr. Kellogg. Yes. 

Mr. Campbell. Were you at that time operators of large charter 
tonnage ? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 343 


Mr. Kellogg. Yes. 

^ Mr. Campbell. Have you since the war been operators of Shipping 
Board tonnage? 

Mr. Kei, logo. \ es. And we are operating a regular line of Ship¬ 
ping Board boats to South America—these large passenger boats— 
the only American passenger line I know of to South America. I 
know the American Legion was recently put into that trade. 

Mr. Edmonds. How many passenger boats have you running in 
that trade now ? 

Mr. Kellogg. There will be three. 

Mr. Edmonds. The American Legion will make the third? 

Mr. Kellogg. The American Legion will make the third. There 
are two others, the Martha Washington and the Callao , that carry 
some freight, being smaller boats. We are now operating the Amer¬ 
ican Legion , the Aeolus , and the Huron. 

Mr. Edmonds. They are all above 10,000 tons? 

Mr. Kellogg. Yes. 

STATEMENT OF ME. KENNETH E. KNOWLES, NEW YORK, N. Y., 
REPRESENTING THE MUNSON STEAMSHIP LINE. 

Mr. Campbell. What is your position, Mr. Knowles? 

Mr. Knowles. 1 am manager of the South American part of the 
Munson Line, which really has to do with the operation of the boats— 
the physical operation. 

Mr. Campbell. Will you tell the committee the physical condition 
which has existed in the South American trade since the armistice and 
the present condition? Just trace the situation down there for us; we 
want to know fully what the situation is. 

Mr. Knowles. I should like to preface any remarks I may make 
directly on that'subject by speaking of the condition I have heard 
several of the gentlemen refer to—that is, the demoralized condition 
of the human element since the war—and to say that lately I think 
we have seen a betterment of that condition. To that condition I 
feel a very large portion of the present difficulties with regard to 
claims is due. Particularly, perhaps, that is so in some of the South 
American countries where the cost of their imported materials, which 
are a very large portion of their trade down there, have gone up so 
tremendously on account of the exchange. It has made attractive to 
them a great many articles that perhaps would not have attracted 
them under other conditions, and it is only lately that we find the 
power of the unions, particularly in South America, being broken, 
as is evidenced, perhaps, by the Martha W ashing ton case, which you 
gentlemen have in mind. 

I believe this is the first time in eight or nine years when we have 
had any competition of a neighbor in Buenos Aires. We have been 
forced to accept such men as were assigned to the respective duties, 
and there was no choice to be had; we simply had to take them. 
Now we find a change has been made, and it will probably extend 
itself so that we will have an opportunity of choosing and have 
much better care of our help, such as watchmen, tallymen, and other 

positions of that kind. . . , . , . , , r , 

The story of the operation in South America is fairly short. Most 
of the ports are entirely fiscalized; in other words, they are con- 


344 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

trolled by the Government; practically all of the warehouses. I say 
“ practically ” because I do not know of any outside that are not 
controlled by the Government. We will take Rio and Buenos Aires 
as an example. The steamer coming alongside there is assigned its 
berth by application, we will say, to the customhouse, and the dis¬ 
charge is made directly into the depots of the customhouse. That is 
our delivery at Rio to the consignee, gentlemen—to the custom¬ 
house—and the same applies in Buenos Aires; and the delivery from 
the customhouse to the consignee is made either fairly promptly or 
very much later, in accordance with the consignee’s desire to get his 
goods out. 

Mr. Campbell. What is the physical condition in that respect 
now? 

Mr. Knowles. It is very bad. At the present time the last in¬ 
formation I have seen is that there are some $35,000,000 to $40,000,000 
worth of goods in the warehouses at Buenos Aires that have lain there 
for months, and it is due largely to the drop in prices and the fact 
that the consignees do not desire those goods unless they can get 
them at a price which is satisfactory to them. 

Mr. Edmonds. Do you make your delivery at the customhouse 
wharf? 

Mr. Knowles. Yes, sir. At Buenos Aires there are four very large 
docks and the warehouses are situated along the side of the river in 
a double row, with cranes in between the boat and the warehouse, 
and even cargo which carries no duty at all is discharged directly 
into the customs warehouse. Occasionally, such material as lumber, 
coal, and bulk cargoes are discharged under Government supervision 
into regular depots for this purpose. Of course, they are not subject 
to pilferage to any great extent. 

Mr. Edmonds. Save you had much loss of cargo ? 

Mr. Know t les. We have had a very considerable loss; but, con¬ 
sidering the conditions, I think that the loss has been comparatively 
small. 

Mr. Edmonds. Of course, you have not the condition to meet there 
that they have on the West Coast. You contract yourself out of 
everything and deliver to the consignee when you have delivered to 
the customhouse ? 

Mr. Knowles. Yes, sir. 

Mr. Edmonds. So that you are done with it then ? 

Mr. Knowles. Yes. 

Mr. Edmonds. Your stealing or pilfering would occur on the ship? 

Mr Knowles. If it occurred. 

Mr. Edmonds. Or on the dock here. 

Mr. Knowles. We have spent a great deal of money in the course 
of the last two years in order to prevent any possibility of that very 
thing. We have sent members of private detective forces down as 
members of our crew. We have arranged with the deck officers and 
men on whom we could absolutely rely to take time which perhaps 
they were entitled to ashore, or liberty time, in order to do their 
watches at the hatches, in addition to the regular watchmen which 
we assigned and whom we picked as best we could as the best men 
available. 

Mr. Edmonds. You must have had considerable losses to take those 
precautions. Originally, I suppose you started out and took the pre- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 345 


cautions you would ordinarily, and it grew to such an extent you 
had to take those precautions in order to protect their cargo? 

Mr. Knowles. We did. Originally, for a period perhaps of one 
or two months. And that was particularly with the starting of the 
passenger steamers which carried a very much higher grade of 
cargo than the freight steamers; naturally, because they get the ex¬ 
press package freight; and as the upcurve of our normal" line, we will 
say, was discovered, when those first two boats went out, we took 
additional precautions. 

Mr. Campbell. What ships were they? 

Mr. Knowles. The Moccasin was the first boat, the Callao was the 
second, and the Martha. Washington was the third. Since that time 
we have had constructed in all of the boats special compartments in 
charge of a special deck officer in which certain materials, such as 
silk stockings, underclothing, shoes, plated silverware, and things 
of that kind, have been stowed under the personal care of one of 
our reliable deck officers, such as the first or second mate. He has had 
to get a receipt in the South American port of delivery for the dif¬ 
ferent articles shown on his list and deliver it personally on his 
return to the office. 

Mr. Edmonds. For all packages? 

Mr. Knowles. No; for certain classes of freight which could be 
placed in compartments of that kind and which was most liable to 
pilferage, as found in our case and the case of others. 

Mr. Edmonds. In the case of hosiery, for example? 

Mr. Knowles. Yes, sir. 

Mr. Edmonds. Have you found any pilferage of goods you put 
in this special stowage? 

Mr. Knowles. It has always been limited; I would not say en¬ 
tirely. Occasionally we have found stockings in the boat which 
apparently came from some place of that kind; but I do not think 
any of that has come since we had the compartments fixed. That 
has come on occasions when we had a little more cargo than could 
be contained in that particular compartment and perhaps was stowed 
where somebody could get at it, but I think in most instances very 
little has been taken off the boat. At times when we have suspected 
something of that kind we have had a search made, and in one or two 
instances we have found small quantities taken off. Those are cases 
where the cargo is most likely to pilferage, because in order to get 
off the boat the goods must be concealed in the clothing, and they 
can not get away with much at any one time. 

Mr. Edmonds. Have the competitors of your line taken the same 
care ? 

Mr. Knowles. I could not say. 

Mr. Edmonds. How about the Lamport & Holt Line; they are 
running down there? 

Mr. Knowles. Yes, sir. I do not know as to their methods, but 
undoubtedly they have a strong room. Whether they have had any 
additional compartments built other than to handle precious jewerly 
and things of that nature which would take care of clothing, hosiery, 
and things of that kind I do not know. 

Mr. Edmonds. Do they charge a special price on those things that 
are put in those compartments. 


346 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Knowles. We do not charge a special price for that. They 
would charge a special price on the valuation basis, I presume. 

Mr. Edmonds. You do charge 2J per cent, as Mr. Kellogg stated. 

Mr. Knowles. That is, if they request a rate based on the valuation 
basis, as I understand it, 

Mr. Edmonds. Yes. 

Mr. Knowles. But the strong room I am speaking of is provided 
at our own expense for our own safety, for the safety of the ship¬ 
owner himself, who places the captains in charge of it to take care 
of things he thinks are especially susceptible to pilferage, and there 
is no extra charge for that. 

Mr. Edmonds. In that strong room you carry regular class freight? 

Mr. Knowles. Yes, sir. 

Mr. Edmonds. This 2^ per cent carriage is virtually an insured 
bill of lading? 

Mr. Knowles. Yes, sir. 

Mr. Edmonds. You virtually guarantee delivery of the goods at 
point of destination? 

Mr. Knowles. That question of the insured bill of lading I will 
have to leave to Mr. Kellogg. I do not understand the traffic end 
of it as well as he does. 

Mr. Campbell. Mr. Knowles, would it be practicable to put all 
of your cargo into a strong room on the ship ? 

Mr. Knowles. No; it would not. 

Mr. Campbell. Or to divide the ship into strong rooms? 

Mr. Knowles. The ship is divided now into what you might call 
strong rooms in the holds, and th^t is as near as you can possibly 
come to it to that extent. The cargo is stowed in those holds, per¬ 
haps ’tween deck, and the hatches are battened down. To a very 
large extent, that turns each hold into a strong room; it is very diffi¬ 
cult to enter that until they opened for loading and discharge. 

Mr. Edmonds. Don’t they open those up every day in looking out 
for fires? \ 

Mr. Knowles. Not necessarily. There is that inspection made on 
passenger boats, of course; but there are bulkhead doors on the pas¬ 
senger boats which would be accessible to the proper officer making 
the inspection. On the freight boats it is quite usual to have a boat 
go down without opening the hatches at all, unless there should be 
cargo in there that would be badly damaged by sweating on the 
boats, or something like that, when one portion of the hatch might 
be raised from time to time in order to change the air. 

Mr. Edmonds. Those English lines, like the Lamport & Holt 
Line—do they carry the same limited liability that you do in your 
bills of Jading? 

Mr. Knowles. That I can not answer; I will have to refer that to 
Mr. Kellogg. 

Mr. Kellogg. They do carry the same liability and use the same 
freight rates in making their ad valorem. 

Mr. Knowles. The point I want to make, Mi*. Chairman, is in the 
course of the last two years, speaking for our line, we have spent 
considerable of our own money, and we have made every effort pos¬ 
sible in order to protect the shipper’s interests; and, as far as the 
settlement of claims is concerned, we have endeavored to consider 
those from a fair-minded viewpoint rather than on a technical basis. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


347 


have not only spent a great deal of time thinking out wavs and 
! 1S ] 0t i W"? * he ?? °» rs elves, but we have listened with a 
j-ood deal of interest to the suggestions made by others at different 

imes; and among them some of the real shippers do occasionally 
come with very good suggestions along that line and many of them 
haye been adopted. One thing which has been brought up, but 
Irrll 1 ; ha '\ n< T r . be ™ snccessfidly carried out. I think, in the South 
\v R can trade, is the kind of packages in which goods are shipped. 
VVe fi nd frequently, on delivery at our piers, that packages contain¬ 
ing material which would be subject to pilferage are not in the 
strongest condition in which it might be possible to have them, and 
we have recommended m the case of certain articles a certain amount 
of strapping which would make the entering of the case difficult 
without breaking it all up so that it would be noticed immediately. 
7 ?ut in a great many instances, 1 think, it has not been carried 
through to the fullest extent. That, of course, is beyond our power 
to control, unless we absolutely refused to take the goods—which 
would probably be accepted by our British competitors in that same 
condition if we did not accept them. 

Mi. Edmonds. Is it true that the English ship, delivering goods 
at the ports in South America, will take less care with the American 
goods they are delivering than of the English goods, in unloading, 
and in so far as the handling of the goods is concerned—either in 
unloading on to lighters or unloading on the wharf? 

Mr. Knowles. I do not know of any specific case I could mention 
to that effect. 

Mr. Edmonds. It was so reported by one of the supercargoes of the 
Shipping Board. 

Mr. Knowles. I have heard it has been so reported, but whether it 
is true or not, I could not say. 

Mr. Edmonds. You have never had any personal knowledge of it? 

Mr. Knowles. I have never had an}^ personal knowledge of it. 

Mr. Edmonds. I do not know that there is any other question I 
want to ask. 

Mr. Campbell. What can you do that you are not doing to safe¬ 
guard this cargo? If Congress had said you had to take the full 
liability and had wiped out the Harter Act and said “ We make you 
absolutely responsible for the shipment as insurers,” what could you 
do that you are not now doing ? 

Mr. Knowles. If we had known of anything else, Mr. Campbell, 
I think it would already have been done. 

Mr. Edmonds. Let me ask you a question, just as a matter of 
curiosity. The rates to the West Coast of South America and more 
or less to the East Coast of South America, for theft and pilferage, 
have advanced rapidly with the insurance companies; so much so 
that it was a matter of comment in the nautical journals and the 
different marine papers, and so much so that they said at one time 
they would not take anything to certain ports and certain places 
and thereby rendering the position of the shipper very precarious if 
he took the ordinary bill of lading. Now, do you find this 2J per 
cent covers any liability that may occur in that regard ? 

Mr. Knowles. I could not answer that, Mr. Edmonds, because 
that also is out of my jurisdiction. I really have under my own 
fingers the physical operation only, and as to the relation of rates 


348 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

with the traffic itself, Mr. Kellogg would have to answer that ques¬ 
tion. 

Mr. Kellogg. I think, Mr. Chairman, this movement on the ad 
valorem basis you speak of has only been a recent movement and 
we are not in a position to say just how it has worked out. 

Mr. Edmonds. It is absolutely too early yet to say ? 

Mr. Kellogg. It is absolutely too early yet to say how it really is 
working out. It takes time to average that thing up and to see 
whether we have been getting paid for our risk. 

Mr. Edmonds. If you folks have been taking and all these gen¬ 
tlemen that have testified here have been taking special precautions 
and the ordinary everyday precautions that you ought to take in 
unloading the vessels, handling the goods and checking up, then why 
do we find this continual advance of the average of theft and pilfer¬ 
age losses? And it must be so, because the insurance companies 
when they advanced their rates must have known of that. 

Mr. Kellogg. That advance, as I tried to bring out, was at a time 
when the congestion was so great the cargo could not be properly 
taken care of. 

Mr. Edmonds. The advance they are suffering from to-day has 
only come in the last six months. 

Mr. Kellogg. I think, Mr. Chairman, they are now coming to 
claims that really date back to last year, at least. 

Mr. Knowles. That is right. 

Mr. Kellogg. I do not think you will find they have claims for 
this year in any increased quantity—any increase in the number of 
pilferage claims. 

Mr. Edmonds. Is that being reflected now in the insurance rates, 
Mr. Rush? Are they in a better condition now? 

Mr. Rush. If such a condition arises, it undoubtedly wdll be re¬ 
flected in reduced insurance rates, and it has not come to the atten¬ 
tion of the insurance companies that it is so. Naturally, anybody will 
say when there is less freight shipped and less congestion, there 
ought to be less pilferage claims than when there is a big rush of 
goods; that stands to reason. 

Mr. Campbell. Over what period of time do you figure ? You in¬ 
sured in the year 1920, we will say. 

Mr. Rush. Yes. 

Mr. Campbell. And you collect your premiums during that year. 
Now, over what period of time will those losses average, so that you 
will know the results of the 1920 business? 

Mr. Rush. It depends on what their destination is, Mr. Campbell. 
To South America it is very slow; that is the slowest of the lot. 

Mr. Campbell. Can you tell now, for instance, your company, 
what your losses are going to total as a result of the 1920 business to 
South America, or even for 1919 ? 

Mr. Rush. No, sir. If I could do that, I would play the stock 
market. [Laughter.] 

Mr. Knowles. We know that from $25,000,000 to $40,000,000 worth 
of goods are in the warehouses at Buenos Aires. Those goods have 
been there, some of them, for over a year, and have not been accepted 
by the consignees yet. Therefore, if there has been any shortage in 
those goods during their stay in the customshouse down there, that 
claim has not yet been filed, and in all probability if it were filed 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 349 

no\\ it would not be considered at all because it had not been filed 
^ ithin a reasonable time after the time of delivery by the transporting 
carrier. & 

Mr. Edmonds. Men buying those goods to-dav would have to buy 
subject to what is in them? 

Mr. Knowles, that is what they are doing and trying to do. The 
claims from bouth America are always a long time in reaching here. 
If the goods arrived and were examined immediately upon arrival, 
it would take perhaps six months for the claim to‘be filed in the 
States. 

Mr. Edmonds. Your company has washed its hands on those claims 
altogether ? 

Mr. Knowles. After delivery to the customhouse. If we have a 
package accepted and get a clean receipt from the customhouse and 
they examine the goods very carefully, naturally they assume the 
obligation from then on, and it would have to be that way. If we 
were to assume the obligation while the goods were in the custom¬ 
house, we would assume something over which we have no control 
whatever and which we can not guard and can not watch. 

Mr. Edmonds. Your condition on the east coast is somewhat better 
than it is on the west coast, where the cargoes are lightered. What 
do you do, Mr. Kush, with the cargoes down at Buenos Aires, which 
are tied up ? 

Mr. Rush. They would not be liable for a drop in value; they are 
only insured against sea perils and acts of God, and, to a certain 
extent, pilferage. In the case of Buenos Aires, their risk terminates 
within 10 days of the arrival of the goods on shore, so that we have 
no interest in w T hat happens afterwards. 

Mr. Edmonds. Are not these goods insured by you ? 

Mr. Rush. Not by any insurance company, unless it be by a repre¬ 
sentative of the company down there, against fire. 

Mr. Edmonds. They have not any more sea perils ? 

Mr. Rush. They have not any more sea perils; only thief perils 
and political perils and a few other things. I would like to state, 
sir, that South America is an awful proposition. I agree with what 
the steamship people say about the way they handle goods. Handling 
is not the word; “ mishandling ” is the word you want to use. They 
are a pretty tough bunch when it comes to stealing the goods, from 
the President of the Republic right down. I hope I have not over¬ 
stated it, but that is my opinion. 

Mr. Knowles. I do not think you have overstated it. Before I 
retire, may I bring out one point. Mr. Loines spoke of a prod to 
make the steamship companies more careful in guarding against 
shortages of cargo. Both Argentina and Brazil have a system of 
fining the steamship company double the duty for all shortages exist¬ 
ing on delivery of the cargo at their ports, 50 per cent of which 
fine goes to the customhouse and 50 per cent to the person or officer 
who discovers the shortage. Now. that in itself is a fine which the 
steamship company has to pay and is sufficient prod to make them, 
do everything possible in their power to prevent any shortages. The 
only way that can be corrected is by cable advices or a certified state¬ 
ment from the Argentine or Brazilian consul to the effect a clerical 
mistake has been made in the papers of the steamer, and that must be 


350 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

presented to the customhouse down there before the arrival of the 
steamer; otherwise the fine takes effect for the double duty. 

Mr. Edmonds. How about after it gets on the dock at Buenos Aires, 
when it is opened up and found to be short? 

Mr. Knowles. In that case it would not apply, because they would 
collect the regular duty upon the contents of that case from the con¬ 
signee at any rate. It is not a question of the steamship liability 
then; that is a question of the liability of the man who would ordi¬ 
narily pay the duty. This fine in itself is sufficient penalty, it seems 
to me, for the steamship company to suffer now. 

(A recess was thereupon taken until 8 o’clock p. m.) 

EVENING SESSION. 

The subcommittee reconvened at 8 o’clock p. m., Hon. George W. 
Edmonds presiding. 

Mr. Campbell. I would like to have you hear Mr. Leakway briefly. 
Mr. Leakway is the manager of the Bull Co. and has come down here 
specially to tell you about the Bull operation, because the Bull Co. 
has been especially complimented and I wanted the committee to see 
the justification of the compliment. 

Mr. Edmonds. If you will, tell us as briefly as you can what your 
situation is. 

STATEMENT OF MR. A. N. LEAKWAY, NEW YORK, N. Y., 
REPRESENTING THE BULL-INSULAR LINE. 

Mr. Leakway. Mr. Campbell mentioned that the committee would 
like to be informed on the assessment of our ad valorem charge, which 
takes off the limitation of liability from our bill of lading. We have 
always had in our trade a waiving of the limitation of liability as 
covered by our clause 21 in the bill of lading, providing an ad valorem 
percentage were assessed upon the actual value of the cargo moving, 
in excess of $8 a cubic foot for a package measuring less than 12| 
cubic feet, or in excess of $100 a package for a package measuring 
more than 121 cubic feet. 

Mr. Campbell. For that release, what do you charge? 

Mr. Leakway. We have been charging 2 per cent in the Santo 
Domingo trade and 1 per cent in the Porto Rican trade. 

Mr. Campbell. Where do you operate? 

Mr. Leakway. We operate between New York and Porto Rico; 
but the 1 per cent ad valorem in Porto Rico has just been changed to 
2 per cent by the Porto Rican subcommittee of the West Indies con¬ 
ference. 

Mr. Campbell. In addition to waiving the release valuation clause 
in your bill of lading, do you also provide a marine insurance cover 
for your shippers if they so desire? 

Mr. Leakway. Yes; if any of our shippers do not have the facili¬ 
ties for placing marine, theft and pilferage, and war risk, we will 
cover them under an open policy carried by our firm from Wilcox, 
Peck & Hughes, adding on to the bill of iading just the premium 
charges assessed against us by the insurance company. 

Mr. Campbell. That is under an open cover that you keep with 
Wilcox, Peck & Hughes? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 351 


Mr. Leakway. An open cover that we keep with Wilcox. Peck & 
xiugnes. 

Mr. Campbell. Will you tell us, just briefly, what system of care- 
f y° u have. M hat do you do to protect your cargoes from 
theft and pilferage? 

Mr. Leakway We have two watchmen on the gate, known as gate- 
men. First, I should amplify by stating that all of our watching is 
clone by an outside concern; not by our company. We employ an 
outside agency to do our watching. In order to place a check upon 
that agency, the responsibility for the work they do is placed en¬ 
tirely up to our dock superintendent and assistant dock superin¬ 
tendent, who are both active men on the pier and not spending their 
time m the office. In order to further check the operation "of the 
watching agency, we employ two gatemen under our own employ— 
making two men on the gate!, We emplo}^ from three to five watch¬ 
men on the short pier and one roundsman for that pier, except at 
times when we are receiving no cargo, when we reduce the number 
of watchmen on the pier in accordance with the amount of cargo on 
the pier. 


The gateman, in addition to supervising the line-up of the teams, 
are compelled to keep a record of every truck entering our dock, 
taking the license number of the truck, counting the number of pack¬ 
ages on the truck as it enters the dock, and counting the number of 
packages on the truck as it leaves the dock—one watchman taking 
the trucks entering and another the trucks leaving. The idea there 
is to prevent the carrying of cargo off the dock which should not 
rightfully be taken off. This record is forwarded to the main office 
and has not only resulted in putting a check on improper taking off 
the dock of cargo but it has served as well to aid our shippers in 
disclaiming claims made against them by truckmen for detention on 
the pier. 

Cargo of a special nature, such as silk goods, shoes, and valuable 
cargo, is received by a clerk appointed bv the head dock clerk. About 
25 feet inside of our gate we have a crib, or rather, a bin. made of 
heavy oak from floor to ceiling, with a padlock. That bin is in 
charge of a special watchman of the watching agency. The cargo 
is delivered to that bin by our check clerk in the presence of this 
special watchman, who gives a receipt for that cargo. It remains 
in that bin until the date of the steamer’s loading, at which time 
it is taken out of the bin, in the presence of that watchman, who is 
the only one who possesses a key to that bin, and laden on the 
steamer. 

Our regular line steamers to Porto Rico are equipped with a spe¬ 
cial cargo locker in the forward part of No. 2 ’tween decks, which 
is the portion of the ship immediately in front of the bridge. It is 
checked into that bin by a check clerk, in the presence of one of the 
watching agency’s men, and we are compelled to furnish them with 
a clean receipt. If any cargo has been tampered with, the watching 
agency is responsible for the cargo so tampered with and must reim¬ 
burse us. 


Mr. Edmonds. How long have you been employing those precau¬ 


tions ? 

Mr Leakway. Me have been employing those precautions for at 
least the past 18 months. 


352 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Edmonds. Was this your customary way of handling freight 
before the war? 

Mr. Leakway. As to that I can not answer; I was not connected 
with the Bull Line at that time. 

Mr. Edmonds. You had a good bit of loss, I suppose, and were com¬ 
pelled to go into this? 

Mr. Leakway. It was not so much the loss as it was that particular 
class of cargo. 

Mr. Edmonds. How long have you been guaranteeing cargo for an 
extra premium? 

Mr. Leak way. That has been in effect ever since I have been with 
the Bull Line, and I believe has been the practice in the Porto Kican 
trade and the West Indies trade for many years. 

Mr. Kirkpatrick. What percentage of the shippers take insurance, 
and what percentage rely upon your unlimited liability arrangement? 

Mr. Leakway. We have very few shippers that avail themselves of 
the unlimited liability. As a matter of fact, one shipper in par¬ 
ticular—I think it is costing him money, but he has kept up the 
practice. 

Mr. Edmonds. You have your own piers at Porto Pico, have you 
not ? 

Mr. Leakway. We have a long-term lease from the New York 
Dock Co., on Pier 27, Brooklyn. 

Mr. Edmonds. Yes; but in Porto Rico. 

Mr. Leakway. Do we own our piers in Porto Rico? 

Mr. Edmonds. Yes. 

Mr. Leakway. In Porto Rico we lease our pier from the Insular 
Dock Co. in San Juan, in the Port au Ponce. The dock is owned by 
the Municipal Dock Co., and all steamers dock at that wharf. At 
all other ports on the island of Porto Rico there are no wharves; 
the steamers discharge into lighters sent out by the consignees. 

Mr. Edmonds. Do you have much loss down in Porto Rico? 

Mr. Leakway. Our losses have been rather heavy, but I would not 
say excessive. 

Mr. Edmonds. Do you still have them? 

Mr. Leakway. Our losses have been materially reduced. 

Mr. Edmonds. Are }mur losses in Porto Rico mostly where you 
lighter ? 

Mr. Leakway. No. 

Mr. Edmonds. You go to San Juan all right; you do not have any 
losses there, do you ? 

Mr. Leakway. Yes; we have losses at San Juan, but I do not be* 
lieve that that is due to lack of precautions as much as it is due to 
the conditions in Porto Rico. 

Mr. Edmonds. You have no customhouse officials to bother with 
there ? 

Mr. Leakway. We have no customhouse officials to bother with 
there; no. 

Mr. Edmonds. You have a closed pier? 

Mr. Leakway. We have a closed pier. 

Mr. Edmonds. And yet you have stealing going on on the pier ? 

Mr. Leakway. That I can not say, whether the stealing occurs on 
the pier or not. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 353 

Mr. Edmonds. If it does not occur there, where does it occur? 

Mr. Leakway. It could occur in transit, prior to the time the 
steamship company signed for the goods. It could also occur after 
the goods had reached the steamship company’s hands: a package 
might be signed for m apparent good order and condition, just as 
they aie always signed for, and'we might also get a receipt from the 
consignee or his driver for the package in the same like good order 
and condition, and yet that package might be delivered with portions 
of the cargo missing. It would be impossible to place the respon- 
sibility of wdiere that occurred. 

Mr. Edmonds. Do you know whether it occurs in Porto Rico or at 
this end ? 

Mr. Leakway. I am not prepared to state. We have carried on 
numerous investigations and I believe a lot of the pilferage has oc¬ 
curred prior to delivery to the steamship company’s hands, and I be- 
lie\e a lot has occurred after it has left the steamship company’s 

Mr. Edmonds. You do not guarantee delivery to the consignee after 
it leaves your wharf in good condition? 

Mr. Leakway. No; but, neverthless, a package can leave our wharf 
in apparent good order and condition and still part of the contents 
will be missing. TV e have had instances where cases have been opened 
at the consignee’s warehouse in Porto Rico and found to contain 
bricks and old newspapers, some of the newspapers being prints from 
the middle west of the United States. We have had others bearing the 
postmarks on canceled letters coming from the Twenty-third Street 
district of New York, from that post office, and our wharf is located 
away over in Brooklyn so that it would be impossible for any of our 
employees to have pilfered that cargo and repacked it with that kind 
of packing. 

Mr. Edmonds. Well, when that package shows any tampering, of 
course, you locate it when it arrives at the pier? 

Mr. Leakway. If a package arrives at the pier which shows any 
tampering, that package is refused; the shipper is communicated 
with and asked to be present at the wharf while we open the package. 
We had an instance occur just a couple of weeks ago. A shipment 
arrived at our pier and we had room to believe that the shipment had 
been either tampered with or had been repacked. We communicated 
with the shipper and he refused absolutely to have that cargo opened 
by our employees and removed the cargo from our wharf. We have 
had another instance of two packages- 

Mr. Edmonds. Is that a case where rags w r ere packed for silk ? 

Mr. Leakway. No; they happened to be another commodity, not 
quite as valuable as silk; but the cases showed evidence of having been 
tampered with—either tampered with or repacked. We wished to 
open several of those packages as a test, to see what the contents were, 
and the shipper refused. 

Wp have had other packages arrive at the dock, notably two cases 
that have come to my mind that were in absolutely perfect order; it 
was impossible to see that there had been any tampering with them. 
The cases were rather light. Those cases were supposed to contain 
shoes. After being opened, they actually contained shoe boxes with 
pieces of 2 by 4 timber sawed to the length and size of that box. At 

€0683—21-23 


354 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


the present time, three men are held for trial on those two cases— 
truckmen of the United States Trucking Corporation. 

Mr. Campbell. Where did that shipment originate? 

Mr. Leakway. That shipment originated in Boston, Mass. It was 
shipped to New York and laid in the warehouse, I believe, of the 
United States Trucking Co. for about 30 days; left their warehouses 
one afternoon and arrived at our pier the following morning. It 
actually got by us and got into our special cargo locker. We received 
a call from the shipper, stating that the police department had picked 
up these particular shoes—they were a special brand of shoes, bear¬ 
ing the consignee’s mark—in upper New York. He asked if we could 
let him know the number of the truck that delivered those shoes and 
that we hold the cases. We held the cases to be opened in the presence 
of the detectives. Now, the special list I referred to in the first part 
of my talk enabled the district attorney to identify the truck that de¬ 
livered those cases and that is the only way they located the men who 
were responsible for that pilferage. 

Mr. Campbell. What shoe company was it that shipped those? 

Mr. Leakway. I can not recall, offhand. 

Mr. Edmonds. I presume it was that same case that was testified 
to to-day. Did the trucking company make good that loss? 

Mr. Leakway. I can not say. The steamship company was not 
held liable for the loss. Of course. We would have been liable for that 
loss-- 

Mr. Edmonds. Had you started it on its way? 

Mr. Leakway. Had that started on its way. 

Mr. Edmonds. Are you through? 

Mr. Leakway. If'there are no questions. 

Mr. Laws. Do you charge anything extra for the special care to 
the shoes and things that you put in this locker ? 

Mr. Leakway. Not at all. 

(The letter referred to reads as follows:) 

Bull-Insular Line (Inc.), 

New York, July 21, 1921. 

Dr. S. S. HuEbnEr, 

^United ; State&. Shipping Board, Washington^ D. C. 

Dear Sth: In accordance with a request of one of your colleagues during the 
hearing last evening, I inclose copies of our freight tariffs-applying between 
New York and,ports in Porto Rico and between New York and ports in the 
Dominican Republic. 

Your attention is directed to clause 5 of these tariffs, describing the limita¬ 
tion of liability of the carrier, as well as the option of having this limitation 
waived by the assessment of additional freight charges. 

A committee appointed by the Porto Rico subcommittee of the West Indies 
conference for the purpose of revising the tariffs to Porto Rico submitted 
to the conference a revision of rule 5. reading as follows: 

“ 5. Packages exceeding .$8 per cubic foot in value, unless a higher value be 
stated on the shipping receipt and again in the bill of lading, the value of 
the goods is taken to be the invoice cost plus freight prepaid, but not in excess 
of $8 per cubic foot with a limit of $100 per package. If a higher value be 
stated in the shipping receipt and again in the bill of lading and declared to 
be the basis for freight, the rates of freight herein named will be charged 
(subject to minimum charge herein named) and plus 2 per cent of the 
value that is declared in excess of $8 per cubic foot when the package measures 
less than 121 cubic feet, and plus 2 per cent of the value that is declared in 
excess of $100 per package when the package measures more than 121 cubic 
feet. Carrier’s liability on partial loss of contents of package will be the same 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 355 

proportion of the value stated above as the partial loss bears to the original 
contents of the entire package.” 

This rule met with the approval of the conference and will be incorporated 
in the new issue of the tariff which we hope to put into effect August 15. 
When the tariffs to the Dominican Republic are reissued clause No. 5 will 
be amended as above. 

If there is any other way in which we can serve you we shall be happy to 
do so. 

Yours, very truly, 

A. FI. Bull & Co., 

A. N. Leak way, 

Manager' West Indies Department. 

Mr. Campbell. Now, Mr. Chairman, we have had several witnesses 
heard that we brought here from the members of the American 
Steamship Owners’ Association. That is about all you can hear in 
one day. If you want to continue your hearing here, or will come to 
New York, we will produce men from all of the old-line steamship 
companies doing business out of the port of New York, and we will 
show you the same kind of care in the handling of this cargo and 
the watching of it on board of the ship and in making delivery. I 
think }T)ur investigation is right along the right lines, and I would 
like to see you go to the bottom of it; but you can not do it here in 
Washington. 

Mr. Loines will now talk to you about protection and indemnity 
insurance. 

STATEMENT OP MR. RUSSELL H. LOINES, NEW YORK, N. Y., SEC¬ 
RETARY AMERICAN STEAMSHIP OWNERS' MUTUAL PROTEC¬ 
TION AND INDEMNITY ASSOCIATION (INC.). 

Mr. Loines. Mr. Chairman, I am the secretary of this American 
Steamship Owners’ Mutual Protection and Indemnity Association of 
which you have heard some caustic reference during this hearing 
from the representatives of the underwriters. I want to tell you, 
briefly, what this association is and stands for. 

Mr. Edmonds. This is the American Ship Owners’ Association? 

Mr. Loines. This is the American Steamship OAvners’ Mutual Pro¬ 
tection and Indemnity Association and has no connection whatever 
with the American Steamship Owners’ Association. 

Mr. Edmonds. I thought you said the American Steamship Own- 
ers’ Association. 

Mr. Loines. You will find in the July number of the Marine Re¬ 
view a rather full account of the history of protection and indemnity, 
if you are interested in incorporating that in your records. I will 
say, brieflv. that most maritime countries have found it a convenience 
to deal with their marine liabilities, beyond those which are covered 
in the ordinary marine policy—the niarine policy covers only the 
shipoAvner’s liability for collision—in these mutual associations to 
which the members contribute in proportion to their tonnage, in con¬ 
sideration of the protection from liabilities incidental to the opera¬ 
tion and management of the steamers. 

I will leave with you a copy of the extracts from the by-laAvs and 
a summary of the nature of the risks covered; also a copy of our in¬ 
structions to masters and lists of agents. 

(The summary of the nature of risks coA^ered is as follows:) 


356 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


American Steamship Owners Mutual Protection and Indemnity Associa¬ 
tion (Inc.). 

nature of risks covered. 

Owners’ liability, in respect of the vessel insured, for— 

1. Injury to any person, including laborers handling cargo, members of crew, 
passengers, persons on another vessel, or to any other person, including burial 
expenses, not exceeding $100. 

2. Damage to other vessels by collision, to the extent of one-fouth of the 
amount, when this risk is not covered in hull policies. 

3. Damage to other vessels and their cargoes otherwise than by collision, 
including damage by wash of steamer, crowding other vessels ashore, causing 
two or more other vessels to collide, etc. 

4. Damage to docks, piers, jetties, breakwaters, buoys, cables, and other fixed 
or movable objects, and to property on docks or piers. 

5. Damage to cargo, or responsibility for cargo carried or to be canned, 
including shortages and over carriages, exclusive of shortage consequent on 
B/L guarantee. Subject to a stated deduction on each voyage. 

6. Expenses of removing the wreck of the vessel. 

7. Repatriating members of the crew. 

8. Extraordinary quarantine expenses, by reason of outbreak of plague or 
other contagious disease on the vessel. Subject to deduction of $200. 

9. Illness of passengers or seamen, including burial expenses up to $100. 

10. Smuggling, mutiny, or unfounded claims of crew. 

11. Customs and immigration fines and other fines arising from neglect or 
default of captain or crew. 

12. Cargo’s proportion of general average, if not otherwise recoverable, as 
in cases where the C/A is brought about by the vessel’s negligence. 

13. Legal and other expenses incurred in relation to any of the above risks, or 
when authorized in the interest of the association. 

This American association was organized on February 20, 1917. 
Prior to that time American owners had been obliged to cover their 
risk through British associations. The British associations, I may 
say, had existed since 1865 or thereabouts. Norwegian and Swedish 
associations also existed for the protection of steamers of those 
nationals. Before we got into the war our owners found it an in¬ 
convenience to be subjected to the rules laid down for the conduct 
of the English associations, so that an association here on similar 
lines became essential, and at the demand of a large number of ship¬ 
owners we incorporated. At that time we had a membership con¬ 
sisting of 1,000,000 gross tons. We got into the war and after the 
Government requisitioned a large part of the tonnage our directors 
extended the cover of the association to take care of the Govern¬ 
ment’s interests in the requisitioned vessels, and subsequently, when 
the German steamers were taken over, the Shipping Board found 
it convenient to have these matters dealt with through our associa¬ 
tion, and so we took in, little by little, the tonnage of the Shipping 
Board. We now have a tonnage of about 8,000,000 tons. 

It is our duty to investigate and handle all these claims made 
against the owner. You will see from the list that there are at least 
a dozen different subject matters which we cover. The bulk of them 
ars included in the cover of lose of life, personal injury, and cargo 
claims. We cover not only theft and pilferage, but damage to cargo, 
claims for overcarriage, and other responsibilities incidental to the 
carriage of cargo. All of these claims that occur in any manner, 
after being investigated, handled, setttled, etc,, are distributed over 
the entire tonnage pro rata; each member pays his share of the year’s 
expenses in proportion to the entered tonnage. We are, therefore. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 357 

strictly a mutual association. Our function is service more than in¬ 
surance; we are a service organization. We relieve the individual 
shipowener of the necessity of maintaining a considerable staff to 
do a lot of the rough work of investigating all these cases, and bv 
having the work concentrated and conducting it on a large scale we 
are able to render this service quite economically. We have a staff 
of more than 100 in our New York office and we maintain offices also 
m can Francisco, Seattle, Boston, Philadelphia, and Baltimore, and 
we have agents in other ports of the United States and in all of the 
ports of the world. 

Mr. Edmonds. Who is the president of your company? 

Mr. Loines-. Mr. Alfred Gilbert Smith, president of the Ward 
Line, is chairman; Mr. Win. A. Thompson, of the Texas Co., is 
deputy chairman. Our other directors are Maurice Bouvier. of the 
Grace Line; Mr. C. W. Jungen, of the Southern Pacific Co.; Mr. 
Tomlinson, of the United American Line; and Mr. W. B. Keene, act¬ 
ing director of operations of the Shipping Board. 

These claims after being investigated are passed upon bv our di¬ 
rectors at their monthly meetings, and our experience in dealing with 
the claims is availed of to secure methods of prevention. Early in 
the war, almost as soon as war started, when the shipments of cargoes 
in large bulk began transatlantic, we found it desirable to have a 
special survey of the stowage of those boats. New kinds of cargoes 
were being carried which many of the owners did not understand. 
We employed two surveyors who examined the stowage of all ships 
out of New York, with a special view of detecting errors and pre¬ 
venting claims before they occurred. A little later we took on our¬ 
selves the responsibility of looking after the seaworthiness of many 
of those vessels, and we have a retired naval officer and a retired 
Coast Guard officer acting as surveyors, who give their special atten¬ 
tion to matters of seaworthiness of doubtful vessels. We render a 
similar service in San Francisco and other ports, where we call upon 
outside experts, not in our employ, to render a similar service on 
special occasions when it is necessary, so that the owner is able to 
call upon us and have the benefit of expert advice on a good many of 
those matters which, if they are not carefully looked after—and 
many of the owners can not maintain the staff to look after them— 
would otherwise let him in for claims. 

We follow up our members from time to time with the results 
of our experience and draw their attention to things that are not 
properly done, and send out circular letters from time to time to 
keep them toned up. I do not wish to burden the record, but I will 
just mention the subjects of some of those circular letters—overload¬ 
ing; poor stowage too near bulkheads; deficient tarpaulins; tem¬ 
porary bulkheads and shifting parts; ventilators; steam pipes and 
fire injectors; hose; overloading of tank steamers. I mention those 
as illustrative of the kind of preventive work which we do. Please 
bear in mind that we have in our association nearly 90 per cent of the 
seagoing tonnage of the United States, so that our function repre¬ 
sents, in a way, the collective effort of the shipowners to look after 
some of these functions. 

Mr. Edmonds. Particularly in reference to cargo and in handling 
cargo, I suppose? 


358 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Loines. And also, I have not mentioned matters in connection 
with the loss of life and personal injury, where we turn to other 
things. 

To come down to this specific question of theft and pilferage which 
is of special concern to you, I want to say that we took hold of this 
subject.some time ago. We noticed early in 19l9 that things were 
going rather badly and, about June, 1919, we set about investigating 
the cause of theft and pilferage. I assigned one of my staff, who had 
just been released from service on a transport and who had qualified 
during the war as a mate, to certain of the coastwise lines around New 
York. I shipped him as a quartermaster on these boats so that he 
would be able to watch the crew. The result of a number of voyages 
showed that there was a certain amount of petty pilferage going on 
among all of the crews at that time. It did not run into any serious 
figures. The prohibition law had not then gone into effect, and the 
chief subject of the crew's attention was such liquids as there might 
be in the hold of the vessel. We found they got access to the hold 
through the fire room doors. We stopped that bv notice to the 
various owners to have a special watch on the crews. We found they 
w T ere not only interested in liquids but also in food supplies and in 
wearing apparel. 

Mr. Edmonds. Did you find any of those steamers carrying 4 per 
cent beer down there during thje hot weather that you can recommend 
to us ? [Laughter.] 

Mr. Loines. Well, I may have to go under the English flag for 
that, if you are not careful. The pilferage on the steamers was a 
small affair. Pilferage on the docks was more serious. We assigned 
to the docks, as members of the checkers’ unions—we got men into 
these unions and had the conditions on the docks watched pretty care¬ 
fully through them. There was evidence of a good deal of connivance 
between the checkers, longshoremen and the truckmen. We caught 
several attempts to pull off large thefts on the docks, but we met with 
great difficulty in getting any convictions. We discovered, however, 
what was going wrong and, as a result of a number of investigations 
on different docks and trails, we got a special detective service on 
the job for a number of the principal docks in New York and gath¬ 
ered together a good deal of evidence with the hope of securing some 
important convictions. 

We became satisfied that the really serious trouble in the port of 
New York was the fences, which have been alluded to this afternoon 
by Mr. Senecal, of my office. That, we were convinced, was where 
the big thieving was being done. The difficulty of securing convic¬ 
tions I need not enlarge upon; but to stop that was something which 
was very difficult for the shipowner to do. It was outside of his ’ 
control; the “ fence ” work was done before the steamer got the 
goods. It was the kind of thing that was alluded to by the last wit¬ 
ness—the emptying of a box of expensive wearing apparel, of shoes, 
and filling it with other goods. We have had advices that the people 
who deal in things like silks have been making large fortunes by 
organized theft and pilferage of cases. We have succeeded in get¬ 
ting some minor convictions. Unfortunately, the results were not 
very sweeping. We did, however, succeed in this: We insisted that 
our members should reorganize their watching service. Before we 
got into the war the work of watching on these piers was done by 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 359 

old men. who worked 12 hours a day and got about $2.50 wages. It 
was an easy job and there was not very much that they had to do. 
As the thefts began to increase it became evident that they were 
hopelessly unable to compete with them. We insisted that the owners 
should employ competent watchmen, young, athletic, working eight 
hours a day and getting a man’s pay. We got niost of the leading 
companies to rearrange their watching service. 

This was about June of 1920 that this work got well started. 
As a result of that the thefts that occurred on the docks were unques¬ 
tionably very much reduced. The watching service, however, could 
not control the thefts from packages that occurred before they got 
into the shipowner’s possession. Now we state that there has been 
a great improvement in the results with respect to theft and pilfer¬ 
age. That has been testified to this afternoon by Mr. Senecal, who is 
immediately attached to and in contact with that work. I mention 
these things to show that the shipowners are alert and are doing 
their utmost to deal with this condition. 

I want to draw your attention to the fact that the peak of this 
trouble was during the years 1919 and 1920. Since 1918, at the be¬ 
ginning of our second year, our tonnage increased from 1,000,000 to 
8,000,000. Our merchant marine was not, ,early in 1918, highly 
equipped in personnel. Our merchant marine had been largely a 
coastwise affair up to that time, with a few special lines engaged in 
regular trades. We had suddenly cast upon us the burdens of a 
shipping nation striking out in new trades, in new directions, with 
personnel inadequately equipped, at the best, to deal with new condi¬ 
tions. We had all the excitement of war conditions. We had the 
best men from all of these companies being taken away for service. 
That growth of the shipping business, under normal conditions, 
would in itself have been a fearful task to cope with and to organize 
competently. In addition, however, we had these war conditions. 

Another point I should call your attention to is that the shippers 
were also in themselves a war growth in large measure. A great 
many new firms sprung up that were not used to doing foreign busi¬ 
ness. Some of them have testified to-day, and the ignorance of ship¬ 
ping practice and of shipping law they have exposed at this hearing 
is a very fair indication of one of the conditions which the ship¬ 
owners have had to cope with. 

Mr. Edmonds None of the firms that testified here to-day- 

Mr. Loines. I do not mean to-day; I mean during this hearing. 

Mr. Edmonds. You mean the shippers. 

Mr. Loines. I mean the shippers; yes. I refer particularly to the 
instance of the shoe manufacturing concern, which undertook to send 
a large and valuable shipment of shoes to Habana by way of Newark. 

Mr. Edmonds. Let me ask you something. Do you have any of 
these new concerns in your association? 

Mr. Loines. We did. We had them in our association as operators 
of the Shipping Board vessels. We had to look after the operators 
of these Shipping Board vessels, and we undertook the work of in¬ 
structing a good many of them in some of the fundamentals of their 
business. We sent our men around to talk to their operating men, 
not finding it sufficient to circularize them, and we taught them some 
of the things they had to do. 


360 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Edmonds. Did tlieir experience lead to greater losses and more 
troubles than some of the old-line companies with the existing Avar 
condition ? 

Mr. Loines. Obviously their experience was more costly than that 
of the old-line shipoAAmers, who had more knowledge of their busi¬ 
ness. They made more mistakes. 

Noav, consider the problem of personnel of all of our shipowners 
during these three years, which I call incidental to the war, when 
our heavy shipping Avas done— 1918, 1919, and 1920. To begin with, 
as to the seamen and officers Ave had in 1915, the La Follette Act had 
undermined the morale of the seamen. In addition to that Ave had 
the necessity of a large neAv personnel in the service. The union rules 
for the engineers and officers were a serious handicap. I Avant to 
give one illustration of that, because it came under my personal 
observation: I was on a board which investigated the cause of the 
accident to the steamer of the Munson Line that turned turtle at her 
pier, the Moccasin. We were satisfied as a result of our inA r estiga- 
tion that that accident would not haA 7 e happened if it had not been 
for the rule of the engineers’ union that no engineer of the steamer 
should be obliged to sleep on board at night. They compelled the 
OAvners to put a temporary engineer on board. The engineer Avho 
occupied that position that night did not know the location of the 
valves in this ship and was unable when the steamer began to give a 
slight list to do what Avas needful to restore the trim of the A T essel. 
No shipping company in Great Britain, and I imagine many of our 
shipping companies now are free from this restriction, would 
ever think of alloAving their A r essel to remain at the pier overnight 
without an engineer on board who kneAv her. That is an instance, 
and a rather striking one, of the difficulties of personnel Avith Avhich 
our OAvners had to cope. I wish I could give you a list of the claims 
that Ave have had to pay, arising during the war, resulting from 
damage to dock in consequence of the engineer officers putting the 
boat full speed ahead when they got an order full speed astern. If 
Ave had 1 such case, we had 50. 

Mr. Edmonds. Is that in accordance Avith the union rules, too? 
[Laughter.] 

Mr. Loines. That I attribute to the morale of the material Ave had 
to Avork with. During that time the shipoAvners had to get whom 
they could. As another example, 30,000 stevedores, Ave learned from 
Commissioner O’Connor this morning, Avere taken into war service. 
The shipowners, the master steA^edores, would get anybody they could 
at any price to do the work. In European ports there were similar 
conditions. At HarA 7 e, the conditions Avere almost as bad, if not 
worse, than they Avere at Ncav York. I have referred to the condi¬ 
tions in regard to the watchmen. 

These Avere some of the things, Mr. Chairman, that I think you 
should keep in mind in forming your judgment of the shipowner’s 
share of responsibility for these" losses from theft and pilferage 
which are the subject of this inquiry. Remember, also, that the con¬ 
ditions existing in foreign ports during the Avar AA’ere similar. Most 
of our shipments during those years Avere to the Continent and to the 
United Kingdom. That is Avhere the heaviest losses occurred from 
thefts. Now all the disorganization and upheaval of the sendee, all 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMExVTS. 361 


the new service, and the constant changes in personnel, gave the 
predatory nature its chance and contributed to the breakdown of the 
morale, which is admitted by almost all of the witnesses here as a 
large part of the trouble. 

Mr. Edmonds. Did you ever find a case where the captain and any 
of the officers were in collusion with men breaking into packages on 
the ship? 

Mr. Loines. I have known where officers were ready to accept some 
of the drinkables that came up from the cargo. 

Mr. Edmonds. Anything else besides drinkables? 

Mr. Loines. Yes; I have known of a few cases where officers had 
taken silk stockings and ladies night gowns from the cargo and gone 
ashore with them. Those things, however, are minor matters. Mr. 
Chairman. The pilferage done by the crew bulks very small in this 
large problem that you are considering. 

Now, I find the time is going very fast, and I should like to com¬ 
ment in detail on the points made during these three days’ hearings, 
but I must cut it short. What is the remedy suggested for all this 
trouble ? The remedy is suggested by the underwriters and by those 
few shippers who have testified—because I consider that with the 
exception of the packers and some of these associations of manu¬ 
facturers that the shippers who have had serious complaints have 
been very isolated and unimportant in amount—the suggestion made 
is to put the burden on the carrier. Give him an interest in these 
claims. 

I have forgotten to state in my summary of our cover an im¬ 
portant fact as to the interest of the shipowner. On every voyage 
the shipowner bears the first $500 on the cargo claims, from whatever 
cause occurring. That is known as a deductible average. The asso¬ 
ciation pays only the excess of that $500. The shipowner, therefore, 
has a direct interest, as far as our association is concerned, in keep¬ 
ing his claims down. It is suggested that the $100 clause should be 
cut out. 

Mr. Campbell. When you referred to the shipowner having a direct 
interest to keep the claims down, you mean the particular shipowner 
owning that vessel? 

Mr. Loines. The shipowner owning that vessel. 

Mr. Campbell. I did not follow the first part of your statement. 
Did you explain in detail the character of your association in the 
beginning ? 

Sir. Loines. Yes. Now the suggestion is put forward by our 
underwriter friends that this $100 clause should be cut out to give 
the carrier an interest, as if the carrier did not already have a suffi¬ 
cient interest. It has been testified to by Mr. Kyon, of the I. N. M. 
Co., that 80 to 90 per cent of the outward cargo from New York 
consists of packages valued at less than $100. I would like to re¬ 
mind you, too, that that $100 valuation at the present time includes 
a large number of commodities, such as flour, wheat, cereals and 
cereal products, crude metals, foodstuffs in general, chewing gum, 
oils, cotton, sugar, coffee, and other products which bulk largely in 
our trade. If the shipowner has to pay the first $500 of claims on 
every voyage as an individual, if he has to pay his share of all of 
the claims for which his fellow shipowners are liable on the first $100, 
which makes him pay his share of 80 to 90 per cent of all the cargo 


362 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


carried, I ask you in fairness if he has not already a sufficient interest 
in this subject to lead him to take whatever precautions he might to 
prevent pilferage and theft? 

Mr. Edmonds. Does that include the paragraph 4281 articles also— 
your limit of $100 in your bill of lading—precious metals, gold, dia¬ 
monds, and so on? 

Mr. Loines. No. We have special provisions in our by-laws for 
the shipment of precious cargo. 

Mr. Edmonds. How about the bill of lading? 

Mr. Loines. That depends on the individual bill of lading of each 
firm. 

Mr. Edmonds. That is handled as a separate proposition by each 
company as an entity by itself; is that the idea? 

Mr. Loines. Yes. Now, Mr. Chairman, as to the magnitude of these 
thefts and pilferages, we had some figures given us by the first under¬ 
writer who testified, Mr. Kush, as to the thefts and pilferages by sea 
and also by rail, experienced by his company. Those showed that in 
the years 1917 and 1918, the loss in the sea shipments amounted to 
$78,000 and $108,000, respectively; whereas, by rail, the losses 
amounted to $441,000 and $1,202,000, respectively. It is contended by 
the underwriters that if they could eliminate this $100 limitation 
from the bill of lading, and could eliminate some of these other clauses 
that they find objectionable, that would prevent some of these pilfer¬ 
ages by giving the carrier an interest. They have let the cat out of 
the bag by giving us these figures of their losses by rail shipments. 
In those rail shipments, they have had all the clauses in the bill of 
lading that they wanted. Nevertheless, the theft and pilferage w-ent 
on. It was considerably w r orse in its total than the theft and pilferage 
at sea. Now r , they want us to believe that if this $100 valuation clause! 
is cut out, theft and pilferage at sea will be stopped. 

Mr. Leihlbaoh. Are there any figures that would show the value 
of the shipments by rail during the period covered and by sea during 
the period covered ? 

Mr. Loines. I am only giving Mr. Kush’s ow-n figures, vdiich you 
have. 

Mr. Lehlbach. I should imagine that the volume of the traffic by 
rail within the United States is somewhat larger than the traffic on 
ships out of ports of the United States. Whether there is a greater 
ratio in the volume of shipments than the ratio of the respective 
losses, of course, I do not know. 

Mr. Loines. I take it it is his insurance in the shipments, the in¬ 
surances placed by him. You will have to ask him to explain his own 
figures. 

Now, the real reason, Mr. Chairman, wdiv the underwriters want 
to eliminate this $100 clause, I think, is that it not only restricts 
their recovery of theft and pilferage claims, but also restricts their 
recovery of a good many other claims from the carrier. They issue 
their open policy for cover against all marine risks from warehouse 
to warehouse, and under this policy they cover marine perils, fire, 
and a large number of other risks, besides these various risks for 
which the carrier is liable. I have never heard an underwriter admit 
that if any change were made in these clauses that he would give the 
shipper any reduction for the small number of claims proportionately 
that lie would recover from the carrier. The bulk of the claims that 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 363 


the underwriter lias to pay comes from the sea perils. The claims 
against the carrier are a drop in the bucket and would cut no im¬ 
portant figure in his premium. The shipowner, on the other hand, 
is much more affected by these claims, and they cast a heavier burden 
on him. 

The cost of P. & I. cover, I should mention, at the present time 
is approximately 60 cents a ton on the gross tonnage of the ship, 
so that on a steamer of 8,000 tons, which is a fair-sized cargo steamer, 
the cost is about $5,000 a year for these liabilities distributed over 
our whole tonnage. 

Having had some knowledge of the British shipowners’ clauses, 
we are naturally anxious to keep ourselves as close as possible to the 
British standard, and I am glad to say that our experience so far 
has compared on the whole quite favorably with the British. 

Mr. Lehdbach. Is that because they are more liberal in settling? 

Mr. Loines. Well, that might be one reason, Mr. Chairman. An¬ 
other reason might have something to do with the management and 
the scale on which we conduct our operations and the preventive 
measures which we have taken and the size of our organization as 
compared with theirs, which is very much smaller. 

Now, the remedies, Mr. Chairman, it seems to me, are not to be 
found in legislation. They are rather in education, and they are in 
toning up the morale of our service, not only of the personnel under 
the shipowners’ control, of the seamen and the stevedores and the 
watchmen and everything that lies within the scope of the shipowner, 
but they are also with the shipper. The shipper, in the first place, 
has not made the study of the packing of his goods that he should 
have made. In this connection I want to incorporate in the record 
a short paper by Mr. C. C. Martin on One Essential of Successful 
Exporting, and I want to leave with this committee Mr. Martin’s 
book on export packing, which is a very thorough and scientific study 
of the subject. It was referred to by Mr. Bobinson, who, I wish to 
say, has made to my mind the most constructive suggestions for 
improvement that have been submitted to your committee in the 
direction of toning up the morale of the service. 

(The paper submitted for the record bv Mr. Loines is as follows:) 

ONE ESSENTIAL OF SUCCESSFUL EXPORTING. 

[By C. C. Martin, National Paper & Type Co.] 

The title of this paper might well he “ The Cinderella of Export.” for the 
subject of our discuss'on is export packing, the lowly, the nrsunderstood, the 
ignored. Yet, let us always remember that every dollar wrqngly saved on. our 
export packing means hundreds in the pockets of our foreign competitors. 
Neglect of this matter on the part of American shippers cost the marine insur¬ 
ance companies in 1920, for theft and pilfering losses, the very respectable sum 
of $20,000,000, and we are told by certain unappeased critics that even this is 
too conservative an estimate, for a number of companies during the past year 
paid out, individually, more than $1,000,000 as a result of ignorance or indif¬ 
ference on the part of shippers. However, that greater loss, the direct result 
of poor packing, which is expressed in lack of prestige abroad and orders that 
do not repeat, mounts up, we are confident, to several times the maximum 
figure that has been mentioned. 

Doubtless the reluctance to consider duly and justly the export packing 
problem is the result of the fact that the popular imagination conceives this 
to be a problem of amazing simplicity, and we fear that the same imagination 
looks upon the subject as a mechanical one, restricted in its skill and crafts- 


364 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


mansh'p t<> the carpenter’s saw and the carpenter’s hammer. Yet what we 
need most emphatically is a reformation of this popular imagination, for a 
man who s competent in the matter of export packing is one of the best, edu¬ 
cated ind viduals in export trade. Th's man would have to know a great many 
things, of which the following are a few: 

Our expert must be fundamentally informed on the subject of tariff laws 
and transportation conditions, both maritime and terrestr al, throughout the 
world; lie must know a good deal about stowage and the mechan’cs of ship¬ 
ping, and must not be in doubt regarding landing problems in d fferent ports, 
methods of handling goods, and commercial practices throughout the world; 
his must be a h'ghly developed and sufficient knowledge of different woods and 
the technique of case and box construction; familiarity with waterproofing 
methods and varied practice in the protection of commodities must be required, 
as well as expertness in the matter of the holding power of nails, center of 
gravity of shipments, reduct on of cubic displacement, and so on. Our expert 
must also be informed about marine insurance, for he must know when to 
insure against special risks and when not, and he must be acquainted with the 
niceties of particular average. The varied knowledge that has been adv sed 
as a requisite in this circumstance is not an exaggeration but is merely a 
superficial statement of what the men in our packing departments should know 
and what they will know eventually, when we can with confidence and truth¬ 
fulness say that we are prepared to pack our goods with that excellence and 
sufficiency which has characterized the work of certain of our foreign com¬ 
petitors. 

In view of the foregoing it is all the more surprising to note the false sat¬ 
isfaction that a cons'derable number of the exporting fraternity seem to have 
with reference to their export pack ng methods, and one need only test the mat¬ 
ter a very little way to become convinced of the fact that many American con¬ 
cerns interested in and engaged in foreign trade have yet to consider, even in 
a preliminary way, the various phases of this all-important problem. Yet 
when we think that no matter how pleasing our terms, no matter how satis¬ 
factory our promises of delivery, no matter how eminently suitable our goods 
may be to the needs and individual standards of the foreign buyer, all of these 
factors are of relatively slight importance unless the shipment gets into the 
possession of the consignee in good shape, so that he may place the merchan¬ 
dise on sale or in use after the long months of waiting. No exaggeration is 
present when we state that export packing, its sufficiency and its excellence, is 
a link in the chain of foreign trade which must be made of adequate and ster¬ 
ling value if that chain is to do its work. 

Hope and forethought to be of constructive value must be based upon knowl¬ 
edge, and we as American exporters can with confidence feel that the progress 
made in American exporting during the past few years will continue to be 
made, and that in this matter of packing we shall do our part. For let it not 
be supposed that we can not show names and examples in the roll of exporters 
that stand for the very finest sort of work in the matter of export packing. 
The great volume of discord should not permit us to lose sight of the true har¬ 
mony that is present, and we can point with pride to houses that have done 
and are doing all that could be expected either from the standpoint of experi¬ 
mentation or that of practice in the matter of preparation of goods for overseas 
shipment. Many examples could be cited of concerns that have neglected no 
opportunity to make their export package as sterling as the goods they contain; 
that have continually checked factory records with agents’ and consignees’ 
reports; that have employed the finest engineering talent for the purpose of 
designing and perfecting export packages; that have carried through lengthy 
tests in laboratories and in actual practice to determine weakness or strength 
of a particular container; that have shipped goods to foreign countries and 
shipped them back so that the factory itself might see the true condition of 
affairs; that have sent men of experience and ability to watch the shipment en 
route, to note everything that happened to it, so that knowledge of the matter 
might be perfected. We have developed export packing progress in many of 
our standard lines that could hardly be improved, and we have the right to be 
proud and satisfied with much of the work that has been done. However, for 
those who wish to begin their work simply and smcerely, there is no factory 
so small that it can not test its shipments in its own back yard. I know of a 
factory in the Middle West, in fact, I know of several factories in the Middle 
West, that have begun their experimentation at home, and this beginning con¬ 
sists of dropping the package from various heights for the purpose of noting 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


365 


the effect of the fall, both upon the package itself and upon the contents. I 
know of one concern that takes its package up several stories and drops it 
through the elevator shaft, while there are others that limit the fall to more 
modest altitudes—for example, dropping the package out of the first or second 
story window. 

One of the most important things in the matter of export packing is to 
follow strictly the instructions of the consignee. If these were followed, a large 
proportion of export packing failures would cease to exist; and if the instruc¬ 
tions 1 egarding marks, division of the contents of the packages, and so on were 
obeyed, the problem would be greatly simplified. The wrong marks or incorrect 
marks may cost your consignee a great deal in lost time and money, it may 
even lose him the shipment; wrong numbers may cost a tine in the customhouse 
of 25 per cent of the duty; plastering the case with all sorts of advertising 
matter that indicates the contents of the case, may cost the marine insurance 
company a great many thousands of dollars for losses due to pilfering; while 
instances of goods packed in heavy containers for countries where duty is levied 
on the gross weight, or cases of goods packed in fragile and light containers 
where duties are levied on the net weight are too common and too discouraging 
to be mentioned. In this matter of following instructions there is almost a 
classic case of failure to follow instructions on the part of an American manu¬ 
facturer who received an order for goods composed in part of metal and in part 
of wood, and who was told to ship these goods BOO pounds to a case, the metal 
goods in one case and the wooden goods in another. This manufacturer, filled 
with initiative and the desire to be agreeable, decided that his customer’s 
instructions were faulty, and that matters could be greatly improved by ship¬ 
ping one case of GOO pounds. However, he subsequently found, to his great 
surprise, that only 300 pounds could be transported readily over the rough roads 
of the consignee’s country, that there was a relatively high duty on metal 
goods and a relatively low one on wooden goods, and that when both kinds of 
goods were packed in one case the higher duty was assessed on the whole 
package, and also that the customhouse allowed a certain weight for tare 
which would not have been exceeded by either one of the two cases, but which 
was exceeded by the case weighing 600 pounds. 

Export packing is a question of such very great complexity 


that in a paper 
of the essential 
and crates and 


of this length it is only possible to touch upon a very few 
points. One of these points is the construction of boxes 
the technique of nailing and strains. To be sure, the ideal export container is 
that wh'ch will deliver the goods to the foreign customer in perfect condition 
at a minimum cost, but the rub consists in determining just exactly what kind 
of a package will do this work. 

In this matter is must be stated immediately that comparatively l'ttle domestic 
packing can be used for shipment abroad and a new and fresh start must be 
made in the construction of the foreign container. Here the type of box 
selected, the species, quality, and size of lumber used, the method of nailing and 
joining, the kind of strapping and the scheme of packing the contents in the 
box. all vitally affect the sufficiency and serviceability of the export package. 

The qual ty of the lumber as regards seasoning and defects is a vital factor, 
for boxes made of green lumber lose a large part of their strength in drying 
out, owing chiefly to the loosening of the nails because of the shrinking of the 
boards. The character of the defects in boards, such as knot holes, openings 
in the grain and so on, are of the utmost importance and consequently the 
the greatest care should be used in selecting the wood for foreign packing cases. 
Likewise the size of the lumber used, its thickness and width are of great 
moment, and the manner in which the parts of the case are naTed together de 
termines in a large -measure the ultimate strepgt-h of the package. Often the 
addition of a few correctly placed na'ls will increase the strength over 100 
per cent, and it may be generally stated that improper and inadequate nailing 
are two of the most common faults in export containers. The metal strapping 
of export boxes is a prime factor; practically all export cases, no matter what 
their size, we’ght, or destination, should be metal strapped, for properly applied 
strapping greatly increases the strength of the container and is also of material 
assistance in preventing pilfering. Waterproofing is a science in itself, and 
contrary to the general understanding, it may be said that a tin-lined case does 
not always guarantee by any means that the goods are protected from moisture. 

In the construction of crates we have a problem of cons derable difficulty for 
the reason that the construction of crates has not been standardized as has that 
of a case, and it is probable that greater loss is occas'oned by excess cubic 


366 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS 


measurement in crates than is time for boxes. In crates the method of joining is 
absolutely vital, and possibly more than for boxes the importance of proper 
nailing and proper bracing must be taken to heart. 

With reference to bailing we feel that the possibilities of this method of 
packing have not been fully appreciated, but as tune goes on practice will prob¬ 
ably show just how useful the bale is as a labor and time saving factor. The 
War Department states in one of its bulletins, that over $50,000,000 was saved 
during the war by bailing various textiles instead of packing in cases, the ex¬ 
perience of the War Department being not alone interesting from the stand¬ 
point of the actual saving in money, but also from that of the variety of ma¬ 
terials that were so packed, for bales went overseas containing underwear, 
hosiery, sweaters, gloves, coats, trousers, towels, blankets, tents, shoes, hard¬ 
ware, and so on. The advantages of the bale are numerous; we have economy 
of the packing process as compared to that of casing, the saving of some 97 per 
cent in tare, great reduction in warehouse space, saving in dunnage, material 
reduction in cost of the packing, ease of handling, facility of transportation, 
and so on. It is quite possible that by making arrangements with the consignee 
many of our overseas shipments now cased could be baled, for that this method 
is entirely satisfactory with a very wide range of commodities, experience during 
the war clearly demonstrated. 

Conditions in foreign countries must always be clearly kept in mind by the 
export packer for port facilities or lack of facilities, climatic conditions and 
means of transportation by land have an important bearing on the whole prob¬ 
lem. It may well be that the shipment is discharged into a lighter in an open 
roadstead, with the accompanying hazards, and that this first peril is followed 
by others on land in the form of primitive facilities for transportation with all 
the resultant exposure to the elements and possibility of injury to case and 
contents. The man who is familiar with the conditions in foreign ports and 
countries can frequently effect important savings in the character of the pack¬ 
age and can minimize materially the peril of the goods. 

Of prime importance also in this matter is a knowledge of customs require¬ 
ments for these may condition the method of packing, and they have a very 
important bearing on the character of the case itself. It must be appreciated 
that there are a great many different ways of assessing tariff duties and that 
the method used depends on the point of view of the foreign government. Duties 
may be on an ad valorem basis as in the United States; they may be specific 
or on the weight and measurement of the goods as specified in the tariff; they 
may be official, which is arrived at by taking an arbitrary basis of valuation; 
there may be a number of different weights specified, such, for example, as in 
the case of Brazil, where we have gross weight, legal net weight, and actual 
net weight. All of these tariff provisions have an intimate bearing on the char¬ 
acter of the packing and the packing expert must be well informed in the 
premises. 

At the beginning of this paper attention was called to the millions lost annu¬ 
ally by shippers and insurance companies as a consequence of pilfering, and 
in again mentioning this important consideration it seems more or less a duty 
to in a measure relieve the steamship companies of the onus that has been 
placed upon them. It should not be supposed for a moment that because a case 
of goods reaches a foreign port with a portion of the contents missing that this 
is due to pilfering aboard ship. The minute goods leave the factory doors, even 
before they leave the factory, the pilferer may begin to get in his clever hand, 
and from this time on opportunity is abundant for tampering with the case. 
No way has been found to physically prevent pilfering, as it would hardly be 
practical to send goods forward in burglar-proof safes, but it is possible to use 
various forms of safety slips' and nails that will instantly* show that a case has 
been tampered with. 

No discussion of export packing would be complete without mention of the 
Forest Products Laboratory, of Madison, Wis., for the work that the laboratory 
has done in experimentation and research has been of incalculable aid in the 
advancement of the science of export packing. During the war the laboratory 
saved the Government millions of dollars by redesigning packing cases for over¬ 
seas shipments, and the cooperation the laboratory offers the public in the 
matter of solving packing problems can not be too highly praised. All good 
friends of this branch of the Forest Service of the United States Department of 
Agriculture were more than pleased to receive a card from the director a few 
days ago stating that Congress had increased the laboratory appropriation some 
$100,000. Truly a well-merited recognition of worth and accomplishment. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 367 


There have been three points of chief importance that I have tried to em¬ 
phasize in this paper. The tirst is that export packing is as important and as 
much of a science as any other phase of export work. Second, that the man 
who has qualified himself to be an expert in packing bulks large in the capacity 
and talent of foreign trade. Third, that there is gratifying and convincing evi¬ 
dence that appreciation of the first two points is rapidly becoming general 
throughout the United States. 

I believe that the shippers can go a long ways toward the preven¬ 
tion of theft and pilferage by constructing their packages so that 
they inevitably show on observation the effect of having been opened. 
The use of certain kinds of nails and the shape and construction of 
the package, which is dealt with in detail by Mr. Martin, I believe, 
from a careful study of that book, will be useful to your committee, 
and I take pleasure in leaving it with you. 

Mr. Lehlbach. May I ask a question at this point? I believe it 
is your view and the view expressed here by the shipowners generally 
that the large proportion of the theft and pilferage that occurs to 
shipments from the time that the shipment leaves the rail carrier 
until its delivery to the consignee abroad occurs while the property is 
in the hands of truckmen, draymen, or lighter men, and before it 
actually gets to the side of the vessel. 

Mr. Loines. True. 

Mr. Lehlbach. I think I am fair in saying that you consider a 
majority of the cases of pilfering and theft occur at such times and 
not while the goods are in the hold of the vessel ? 

Mr. Loines. Yes'. I think serious losses occur on the docks. 

Mr. Lehlbach. You heard the testimony of the gentleman from 
Baltimore with regard to the experience at that port with respect of 
theft and pilferage. Do you think that there is a decided difference 
between the amount of such losses, in view of the fact that they occur 
at times, as you have described, in ports where it is possible to run 
the rail delivery alongside the steamer dock and load from the rail 
practically into the hold of the ship without the intervention of light¬ 
erage and cartage and trucking? Do you think that a very large 
element of theft and pilferage would be eliminated in a port of that 
kind, as compared to a port where lighterage and trucking and other 
means of transportation are necessary from rail to ship? 

Mr. Loines. Obviously; the reduction of one important stage in 
the transit would reduce the likelihood of theft in the total journey. 

‘Mr. Lehlbach. The use of such a port, as against the port re¬ 
quiring lighterage and truckage, would be a decided economy to the 
shipper ? 

Mr. Loines. Other things being equal. 

Mr. Lehlbach. Other things being equal, you would say yes? 

Mr. Loines. Yes. Mr. Chairman, as I say, I believe that legisla¬ 
tion is not essentia] to deal with this question. I think that it can 
be remedied by concentrating effort and by cooperation on the part 
of shippers and shipowners; and I am sure that the shipowners 
are glad to have the benefit of these underwriters’ suggestions who, 
by reason of insuring, are cognizant of the troubles of their shippers. 
But we think that the matter is one to be worked our primarily be¬ 
tween the ship owner and the shipper direct. 

I won’t intrude any further on your time. 

Mr. Burchmore, May I ask one question: You have heard a 
number of these clausesfn bills of lading reciting all the conditions 


368 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


under which the ship would not assume liability; are you able to 
say, from your experience, whether it is a fact that the better liners 
as a rule do not avail themselves of all these rather extraordinary 
release clauses and saving clauses? 

Mr. Loines. What do you mean by extraordinary clauses ? 

Mr. Btjrchmore. I mean these clauses that have been read here 
reciting the numerous circumstances. 

Mr. Loines. You mean the clauses in the Norwegian bills of 
lading? 

Mr. Burchmore. Yes; and the corresponding clauses in American 
bills of lading. I do not mean to ask you to express your opinion as 
to the propriety of the clauses, but whether they are not generally 
waived when they do not have much doubt as to the claim ? 

Mr. Loines. I should rather say they were generally valueless to 
the shipowners, because of the fact most of them are brought into 
operation by negligence and are, ipso facto, void. That point has 
been made during the discussion of these clauses. 

Mr. Lehlbach. Then why keep them—to safeguard any such con¬ 
tingencies when those things happen without negligence? 

Mr. Loines. I think a good many of them could be dispensed with, 
Mr. Chairman. 

Mr. Lehlbach. I suppose it is like common law pleading; they 
have always been in and so you continue to put them in ? 

Mr. Loines. The carrier is always glad to have some help from the 
burden of proof. 

Mr. Kirkpatrick. Take the clauses providing for notice of loss 
and the commencement of suit and notice of claim within a certain 
time. Do you find that the majority of the companies are disposed 
to waive those clauses, or do they insist on them? 

Mr. Loines. I think those clauses are very often waived. I know 
it is the attitude of a large number of companies, when a claim is 
sound on its merits in other respects, they do not insist on those 
clauses. They are necessarily there for the carrier’s protection', be¬ 
cause a great many shippers take advantage of the carrier by not 
putting in a claim until a time when it is impossible for the carrier 
to get the facts. It leads the carrier into a position where he can not 
defend himself. It is right and just that there should be a reasonable 
time. Now, our courts hold that, in certain circumstances, where 
the conditions make it unreasonable, the clause is not valid. 

Mr. Kirkpatrick. Yes. 

Mr. Loines. You have got to rely on the judgment of the court. 

Mr. Kirkpatrick. Do not they really use those clauses very much 
as an insurance company would use a technical requirement in an 
insurance policy where, for instance, they may suspect a fire to be of 
incendiary origin and can not prove it and they will then rely on 
some failure of notice, and so on? 

Mr. Loines. That is quite true, Mr. Kirkpatrick. I think most of 
the responsible and established companies would do that, and we, in 
dealing with the claims, usually have regard to those considerations. 
It has been admitted by our friends, who handle claims of the under¬ 
writers. 

Mr. Laws. I would like to ask you one or two questions. Have 
you with you any data to show the amount of claims that were pre- 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 369 
sen ted to your association for loss and pilferage and nondelivery, say 

Mr. Loines. At the present time ? 

Mr. Laws. Yes. 

Mr. Loines. No. 

Mr. Laws. That came into your hands through the steamship com¬ 
panies? 

Mr. Loines. No. 

Mr. Laws. Have you any data Avith you to show the percentage of 
claims that were paid during that year, for those losses? 

Mr. Loines. Percentage in relation to what? 

Mr. Laws. In relation to the total claims? 

Mr. Loines. Presented? 

Mr. Laavs. That Avere presented; yes? 

Mr. Loines. No. 

Mr. Laavs. TV ho is the final arbiter as to Avhether or not a claim 
is to be paid ? 

Mr. Loines. By the association ? 

Mr. Laavs. Yes. 

Mr. Loines. The directors. 

Mr. Laaa t s. Or by the steamship company? 

Mr. Loines. The directors. 

Mr. Laws. The directors of the association? 

Mr. Loines. Yes. 

Mr. Laavs. Therefore the directors of the association are passing 
upon the question as to whether or not they shall pay out of their 
oavu steamship company’s pocket, or whether they shall not pay? 

Mr. Loines. Quite so. 

Mr. Laavs. In effect? 

Mr. Loines. Yes. 

Mr. Laavs. And that is true of the first $500 paid by the individ¬ 
ual shipoAvner? 

Mr. Loines. The association is not interested in the first $500. 

Mr. Laws. Then the shipowner himself determines that fact? 

Mr. Loines. Presumably. 

Mr. Laavs. Does your association supervise the docks, as you have 
indicated, at ports other than NeAv York? 

Mr. Loines. Yes. 

Mr. Laavs. TV hat docks; Avhat cities and ports? 

Mr. Loines. At San Francisco regularly and at other ports occa¬ 
sionally. 

Mr. Laws. Any in Europe? 

Mr. Loines. Yes. 

Mr. Laws. Where? 

Mr. Loines. Wherever it is necessary. 

Mr. Laavs. Well, that is indefinite. Can you give it more defi¬ 
nitely than that? 

Mr. Loines. At Havre, Bordeaux, Marseille, Christiania, Copen¬ 
hagen, Hamburg, Bremen, Rotterdam, AntAverp, Genoa, whenever 
necessary. Also in the United Kingdom. 

Mr. Laaats. What objection do you have to a steamship oAvner being 
liable for the full value of an article that is proA T en lawfully in a 

60683—21 - 24 


370 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


court of justice to have been stolen, pilfered, or nondelivered through 
negligence while in the custody of one of your carriers ? 

Mr. Loines. I am very glad you have asked me that question. I 
forogot to bring it out in my direct statement. 

My view is this: We know from what has been testified to in these 
hearings that there is a great chance of theft and pilferage occurring 
while the goods are not in the possession of the shipowner, and in 
such circumstances the shipowner is liable for them, because he is 
unable to prove that the theft and pilferage did not occur while they 
were in his possession. Now, I feel that in fairness it is right that 
the shipowner’s share of that loss should be limited; that there should 
be some burden on the other interests; particularly there should be a 
burden on the shipper to furnish a sound and strong package, capable 
of resisting the events of the journey. 

We are dealing with a condition. We are dealing with a trait of 
human nature that is probably ineradicable—the desire to take an¬ 
other man’s property when you can get your hands on it. That is a 
universal trait, and there is no reason why when during a transit of 
which the shipowner’s share is only one part and a loss occurs the 
shipowner should be brought into the position of paying for the 
whole of it. 

Mr. Laws. I say, assuming that it is legally proven in a court of 
law that the shipowner says that the loss by pilferage or nondelivery 
occurred through the negligence of the shipowner, what answer have 
you to the proposition that he ought to pay the entire amount of that 
loss? 

Mr. Loines. You know, Mr. Laws, that the legal proof in a court 
of law that the shipowner is responsible may be brought home to him 
notwithstanding the fact that he has not been negligent. He may 
be proven negligent because he is not in a position to show the con¬ 
trary. We have had testimony here to-day of a case where the re¬ 
moval of shoes from cases came to the shipowner’s knowledge by pure 
accident when he gets the goods. If he had not had a chance to dis¬ 
cover that those shoes had been removed before he got the package 
and it had gone on to destination and on delivery had been opened 
up and it was then found that that condition existed, he would have 
been in the position where he could not prove that it had not occurred 
in his possession, and the court would hold him negligent. Now, the 
very circumstance that the shipowner is necessarily put in the posi¬ 
tion of being saddled with a loss for which he was not responsible 
makes it very right and fitting and fair that he should only have a 
limited share of the responsibility. 

Mr. Laws. Then you think it is more proper for the shipowner 
to be the judge as to whether or not he should pay the loss than for 
the shipowner and the claimant to come into court, and before a court 
with even-handed justice, have the court decide that question, do 
you ? 

Mr. Loines. I do not make any such sweeping statement, Mr. 
Laws. That is your own inference. 

Mr. Laws. Is there any other inference that we can draw from 
what you say, that you think the shipowner ought to decide it 
rather than to have the court decide it, and that there would be 
more justice done if you decided it than if the court decided it? 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 371 

Mr. Loines. I am considering this question as a large condition 
with which we have to contend. 

Mr. Laws. So are we. 

Mr. Loines. Tou can take a particular case and say that the ship¬ 
owner may be taking an unfair advantage, but dealing with it in a 
large way, leaving this burden distributed, leaving an interest on 
the part of the shipper to make it impossible for the loss to hap¬ 
pen, is a very desirable thing, and therefore I think the limitation 
is one that should be agreed upon. If the limitation of $100 is not 
reasonable, find some other limitation. That has been the tradi¬ 
tional limitation in most States, and we have heard to-day—yester¬ 
day—that it represented an important percentage, 80 or 90 per 
cent, of our shipments. It seems to me that if that is the case it is 
quite fair and proper that the shipowner should not be asked to 
bear more than that share. 

Mr. Lush. I was unaware until sime time ago, when Mr. Laws made 
the statement, that all of this inland loss, when made on railroads and 
express companies—I beg your pardon, Mr. Loines made the state¬ 
ment—that it was all under a release bill of lading, and I was un¬ 
aware that he had had any opportunity to examine our files and say 
that. When did you get that opportunity, Mr. Loines? 

Mr. Loines. I did not know that it was under a released bill of 
lading. 

Mr. Rush. You said so. How did you know that? 

Mr. Loines. I do not remember saying anything about the re¬ 
lease clause in the bill of lading. What I said was this, that on 
the figures that you gave for the sea losses, on which you base your 
suggestion that the $100 clause should be left out—showing the 
enormous increase of theft and pilferage which you had had to 
pay—I said you certainly did not mean to say anything aboqt your 
recovery from the carrier. 

Mr. Rush. I would like to refer to the record, because, as I re¬ 
call it, you stated that the shipments by sea that were lost by some 
fault for which the shipper or underwriter were responsible should 
not be subject to that limitation of $100; but it is proved that where 
we had shipments on land that that limitation did not apply, and 
I was wondering how } 7 ou examined our books to find that out. 

Mr. Loines. My point was. Mr. Rush—which you will find on re¬ 
ferring to the record—that by eliminating any valuation clause from 
a bill of lading you would stop theft and pilferage. 

Mr. Rush. I want to testify that a great deal of that shipment 
by land was under limited value receipts by express companies. 

Mr. Loines. Your land figures, then, were based on a limited form 
of bill of lading? I think that that strengthens my point. On the 
other hand, your losses would have been a great deal greater, per¬ 
haps, if they had not had that release clause. 

Mr. Rush. I just want to say, I think it is unfortunate that you 
testify about the losses by another company, which have nothing 
whatever to do with the case. 

Mr. Burchmore. Should the record not be cleared up on that by 
a question or two? It is a fact, Mr. Rush, that many of our losses 
were on shipments by express, shipments by express in this coun¬ 
ty being customarily subject to a $50 limitation? 


372 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Rush. Quite so. 

Mr. Burchmore. Does that not represent the larger proportion— 
T do not know as it would be half, but a considerable amount—of the 
figures that you gave ? 

Mr. Loines. Your land bill of lading, I take it, contains the absence 
of all of the other clauses to which you object. You will admit, 
perhaps, that the theft and pilferage is as great by land as by sea. 

Mr. Rush. No; I do not. 

Mr. Loines. Well, I don’t care whether you admit it or not. 

Mr. Amberg. In regard to these notice clauses, you have testified 
that it is very difficult for the steamship owner to know whether 
goods are received by the owner as ordered; that the contents of 
the package may be deceptive; goods may have been removed before 
the steamship owner received the package. 

Mr. Loines. Yes, sir. 

Mr. Amberg. And that is not discoverable by a casual inspection 
of the package. 

Mr. Loines. No. 

Air. Amberg. Now take the Persiana , where the court held that a 
clause requiring the receiver to give notice of claim before he re¬ 
moved the goods from the dock—the court held that to be reasonable, 
and we have had much talk about leaving it to the court to say 
whether or not it is reasonable. In your mind is that clause reason¬ 
able in the commercial sense? What I am driving at is this: It may 
be that the courts will lay down a rule of reasonableness, borrowing 
from the common law things having in the consideration of law no 
commercial aspect; in your opinion is such a clause reasonable in 
the commercial aspect ? 

Mr. Loines. Take it by and large, I think it is. 

Mr.. Amberg. One more question, then, in regard to these notices. 
You have stated, and I will admit, as I have admitted this afternoon, 
that it is not uncommon for the steamship owners to waive these 
notices—to be sure at their own pleasure—but do you not often have 
short-notice clauses, which to my mind are a commercial necessity, 
to defeat claims which become larger by discovery of subsequent 
facts? In other words, take the case of a claim for tar paper, roof¬ 
ing paper—I have one in mind where the original damage was 
$100,000; notice of claim was given, suit properly started within 
the rather short limit of three months, I think it w T as; after the three 
months had elapsed it developed that this tar paper had absorbed 
other material—I don’t know what it was—well, it melted, the tar 
paper had melted, and the damage turned out to be $400,000 instead 
of $100,000. When the suit was subsequently started to recover that 
additional damage, the steamship owner pleaded his notice and the 
failure to bring suit within the time limit. Is that reasonable? 

Mr. Loines. I do not like to answer that question without knowl¬ 
edge of all the details of the case. Your office has a great many 
claims lodged, and I should not care to answer a question in regard 
to a particular case without knowing all the facts. 

Mr. Amberg. That is perfectly clear. All I wish to raise is the 
reasonableness of these provisions from the commercial point of 
view. I hope that on the whole we treat them in a fair and reason¬ 
able w T ay. That is all I can say. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 373 


Mr. Lehlbach. Are there {1113/ other questions, gentlemen ? If 
not, you are excused. Mr. Campbell, will you call the next witness? 

Mr. Campbell. Mr. Hickox is going to speak, but I want to ask Mr. 
Kellogg just one question to clear up the situation. 

Mr. Kellogg, does the Munson Line operate out of Baltimore? 

Mr. Kellogg. Yes, sir. 

Mr. Campbell. Will you tell us whether or not there is any appre¬ 
ciable quantity of these high-grade goods passing through the port 
of Baltimore? 

Mr. Kellogg. Most of the goods moving to the port of Baltimore 
in connection with our line, or any of the out ports, move in carloads 
from the interior. 

M r. Campbell. What kind of goods are the} 7 ? 

Mr. Kellogg. They are made up mostly of bulk cargoes; not much 
of the high-class cargoes. The port «f New York gets a greater 
proportion of the cargo where the packages are valued in excess 
of $100. 

Mr. Campbell. That is all. 

Mr. Ryan. I can substantiate that statement, so far as the conti¬ 
nent of Europe is concerned. 

Mr. Campbell. Mr. Hickox is not my witness at all. He is inde¬ 
pendent of myself. 

Mr. Laws. He is vour partner, though, is he not ? 

Mr. Campbell. Yes; I am very glad to say he is. 

STATEMENT OF MR. CHARLES R. HICKOX, REPRESENTING 
CERTAIN STEAMSHIP COMPANIES. 


Mr. Hickox. I testify on behalf of a considerable number of com¬ 
panies, American and foreign, a list of which I will give the ste¬ 
nographer. 

The list referred to follows: 


American Black Sea Line. 

Anchor Line. 

Baltic American Line. 

Bristol City Line. 

Cosulich Line. 

Cunard Line. 

Donaldson Line. 

Ellerman’s Phoenix Line. 

Ellerman’s Wilson Line. 

Fabre Line. 

French Line. 

Funcli, Edye & Co. (Inc.). 

Furness Lines. 

“Head” Line and “Lord” Line (Bal¬ 
timore). 

Holland America Line. 

La Yeloce. 

Lamport & Holt Line. 

Lloyd Sabaudo. 

Manchester Liners (Ltd.) (Philadel¬ 
phia ). 


National Greek Line. 

Navigazione Generale Italiana. 
Norwegian America Line. 
Ottoman-America Line. 

Polish American Navigation Corpora¬ 
tion. 

Portuguese Line. 

Royal Mail Steam Packet Co. 
Scandinavian-American Line. 

Sicula Americana. 

Spanish Royal Mail Line. 

Swedish American Line. 

Trans-Atlantic Steamship Co. (joint 
service). 

Transatlantica Italiana. 

Transoceaniea. 

United American Lines (Inc.). 

United States Mail Steamship Co. 
(Inc.). 


The nature of this inquiry, as Ave understand it, is in the matter 
of theft and pilferage, to find out, if possible, what the causes of it 
are and Avhat, if any, remedies can be suggested. 


374 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

We have had statements and arguments from underwriters and 
shippers for two days, which have stated that claims for theft and 
pilferage have been very large within the last two years, and we have 
drawn from the underwriters two suggestions as to the cause. Those 
suggestions are, as I understood them: 

First. That the Harter Act, although originally a good act, had 
been frittered away by legal additions, with the result that it now 
was a protection to the shipowner, if not an inducement toward 
having such claims continue. 

The other was that the clauses in the bill of lading were also a 
direct inducement to the carrier to permit such claims; certainly they 
were productive of the present situation. 

I shall deal with those two suggestions a little later, but before that 
I will refer to what has been offered in the way of proof as to the 
cause of this theft and pilferage, and that, I think, can not leave 
any doubt in the minds of the committee as to what is variously de¬ 
scribed as a lawless condition in which the world generally has been 
operating for the last several years. Everybody knows that in every 
line of industry the effect of the war, the taking away of a large 
number of the men for military service, their actual experience 
gained as a result of their service, and the exceedingly high wages 
secured by those who did not go into the service; the subsequent 
great rise in the values of everything, easy money all around, has 
resulted in a condition which has been exceedingly hard to deal with 
in all the civilized countries, let alone the uncivilized countries. 

War, of course, is a lawless business, and in consequence of the 
things that are done then, both by individuals and by Governments, 
very many difficulties have arisen, and we have gotten away to a 
large extent from the notions under which we act during peace times. 
The testimony before you shows that that condition is largely fin¬ 
ished, and you know of your own knowledge, aside from the testi¬ 
mony that may be given to you, about what is occurring in the steam¬ 
ship industry; that conditions are gradually returning to normal 
everywhere. 

The steamship people have described what efforts they made to 
meet these claims for theft and pilferage. You find that individual 
steamship companies operating out of New York have spent as much 
as $400,000 a year for watchmen in order to protect the property 
of these various shippers while they were on the steamship docks 
and in the possession of the steamship companies. One of the com¬ 
panies that did not send a representative down here spent, according 
to statements that they made to me a few years ago, $500,000 in one 
year for the expense of watchmen, and the details that have been 
given to you of the efforts that the shipowners have made, I think, 
should convince you that there has not been any negligent manage¬ 
ment of the business going on during this very trying period. 

The steamship people hope that with the continuance of the active 
measures that they have taken matters will settle down, as it looks 
now as if they would settle down, until before a very long period it 
may reasonably be expected that questions of theft and pilferage 
will be no more important than they were before the war started. 

Now, let us deal specifically with these suggestions of the under¬ 
writers as to what they claim to be the causes of theft and pilferage. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 375 

and their suggested remedies. I think it will be sufficiently clear that 
the circumstances disclosed here not only do not support their con¬ 
tention, but they positively disprove it. 

I 1 irst, we will take the question of the Harter Act. The suggestion 
was unequivocal that the Harter Act, in the opinion of shippers and 
perhaps of underwriters, was originally a good act. Certainly ship¬ 
pers have said so, several of them who were speaking at this session, 
but it is claimed that the Harter Act, as the result of recent conditions, 
has been shorn of its original efficacy so that it has become a very 
different thing from what it formerly was. 

Disputes on questions of fact are, of course, somewhat discouraging, 
but there can not be any doubt whatever as to the fact that there has 
not been any recent decisions on the subject of the Harter Act which 
have affected its original intention or its present language, and there 
has not been any amendment of any kind whatever to the Harter Act 
since it was passed. Now, that is not merely a question of whether 
an insurance representative or a lawyer, perhaps, may have different 
views on the subject; it is a matter of absolute record. The books 
can be searched on the subject, and I submit with entire confidence 
that it will not be possible for anybody to find any case which frit¬ 
tered away the Harter Act, or attempts to do so, and certainly there 
have been no decisions within the last half dozen years that have dealt 
with any novel question under the Harter Act. Those questions came 
up during the 10 or 15 years after the Harter Act was passed, and 
while it was in operation, and after, let us say, 1905, I think, there 
were scarcely any decisions under the Harter Act that dealt with novel 
conditions. 

So I think you can take it as a fact that for a matter of upward 
of 10 years before the war the views of the public generally, and 
certainly the expressed views of the court, with respect to the Idarter 
Act were definitely settled and everybody understood what it meant. 

Now, operating under that Harter Act from 1893 until the war 
broke out, there was a period of—well, a dozen or more years—20 
years nearly—in which it had not been found—certainly it has not 
been suggested by the insurance people nor by the shippers—that 
that act resulted in large claims for theft and pilferage, or that it in¬ 
duced in any way the commission of those crimes. On the contrary, 
we have the statements of the insurance people, based on their 
premium charges and their claims for theft and pilferage, that up 
to the outbreak of the war those claims were negligible. Now, if they 
were negligible, we must definitely put to one side the suggestion that 
the Harter Act during the period of the Avar Avas the cause of large 
claims for theft and pilferage. It seems to me that that is a demonstra¬ 
tion. There may be objections that one interest or another may seek to 
raise to the Harter Act, but any such objections can not fairly be put 
forward at this hearing as suggestions warrant it on an inquiry into 
the causes of theft and pilferage. If it is a question of considering 
de novo Avhether the Harter Act is a good act or not, and whether it 
should be repealed, that is a large inquiry Avhich Avould certainly need 
a very much more extended consideration than it has been possible 
to give by the statements that have been going on here in the last three 
days. That question, however, is not a novel one. In 1913 a bill was 
introduced in the Senate by Senator Nelson to secure an amendment 


376 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


of the Harter Act, and hearings were held on that subject. Some of 
the most prominent people, well versed in shipping law, were heard 
at those hearings, and the testimony is incorporated in a document, 
m a pamphlet published by the Government entitled “ Liability for 
damages arising in the navigation of vessels.' 5 Hearings before the 
Committee on Commerce, United States Senate, Sixty-second Con¬ 
gress, third session, on S. 7208, “A bill to amend an act entitled ‘An 
act relating to navigation of vessels, bills of lading, and to certain 
obligations, duties, and rights in connection with the carriage of 
property, 5 approved February 13, 1893. 55 There is a great deal of 
valuable information contained in that publication, which I think 
this committee or any committee considering the general question of 
the Harter Act should be glad to have, and I would like to have that 
pamphlet incorporated as part of my statement. 

Mr. Lehlbach. You mean the entire report of the committee? 

Mr. Hickox. The entire report, yes. I may say that as the result 
of what was developed at those hearings, nothing was ever done with 
respect to the bill. 

Mr. Loines. Excuse me for interrupting—was that bill substan¬ 
tially identical with the bill now pending in the Senate? 

Mr. Hickox. I think it was, but without comparing it paragraph 
by paragraph I can not tell. But the same kind of objections, if not 
the very same objections that have been urged here by the under¬ 
writing interests, were urged on this’ hearing. It developed during 
the hearing that the Harter Act was in accordance with the general 
maritime rules that were existing throughout the world, and we 
find that in 1910 the very same Harter Act was passed with certain 
slight additions, in Canada, and it is now the water carriage of goods 
act in Canada, and perhaps the principal difference between the 
language of the Harter Act and the water carriage of goods act is 
that the Canadian act contains a specific provision incorporating 
what is the substance of a clause in a bill of lading which has been 
subject to most serious attack at these hearings. I will just quote 
that section from the water carriage of goods act. It is section 8 : 

The ship, the owner, charterer, master, or agent, shall not be liable for loss 
or damage to or in connection with goods for a greater amount than $100 per 
package, unless a higher value is stated in the bill of lading or other shipping 
document, nor for any loss or damage whatever, if the nature or value of such 
goods has been falsely stated by the shipper, unless such false statement has 
been made by inadvertence or error. The declaration by the shipper as to the 
nature and value of the goods shall not be considered as binding or conclusive 
on the ship, her owner, charterer, master, or agent. 

Mr. Lehlbach. Doesn’t that language imply an option on the part 
of the shipper to state the true value when he makes his contract ? 

Mr. Hickox. Oh, yes. 

Mr. Lehlbach. But under the present circumstances pertaining in 
the business he is precluded from stating any other value—it would 
not be received and would not be incorporated in the bill of ladino-— 
excepting $100. 

Mr. Campbell. Every line has testified to the contrary. 

Mr. Hickox. On the contrary, the testimony is uncontradicted that 
every steamship company operating—every principal steamship com¬ 
pany certainly—operating out of the port of New York would 
always be willing to give an unlimited liability in amount under 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 377 


their bill of lading if the additional freight commensurate with the 
increased value were paid. Now, there should not be any misunder¬ 
standing about that. 

Mr. Lehlbach. That is where the testimony is contradictory. 

Mr. Hickox. I think mot. 

Mr. I -jEhlbach. Some of the shippers or representatives of the 
shippers, particularly those in the inland points who have not access 
to the New York offices of the steamship companies have testified 
here that it was absolutely impossible to ascertain what such a rate 
would be. 

Mr. Hickox. Well, I can not speak about what may have occurred 
at the inland towns, but I think there is no doubt whatever, not only 
from what has been stated here, but as anybody will know who has 
ever made the attempt in the port of New York, that if you wish to 
obtain an unlimited amount of liability—that is, a declared value of 
your package for $1,000 or $5,000, or whatever the number of dollars 
might be—you can get it. 

Mr. Lehlbach. Furthermore, Mr. Ryan testified here on behalf of 
the International Mercantile Marine, that if application for such 
increased liability based on greater value should be made to them, 
they would not allow that question to be passed on elsewhere than 
at the home office in New York in the first place; and in the second 
place, they would, before making such a rate, want the opportunity 
to ascertain what the insurance charged by underwriters would be 
for such risks; consequently they would not be in a position, without 
inquiry and investigation, to quote such a rate. 

Mr. Hickox. Possibly not. 

Mr. Ryan. Mr. Chairman, may I correct you there? I think you 
did not quote me quite accurately. 

Mr. Lehlbach. I want to be corrected if I did not. 

Mr. Ryan. In answer to Mr. Rush’s inquiry as to what rate I 
should make on a given valuation, I stated that before being able to 
make the rate, the process I would follow would be to consider all 
the facts, value, bulk, and so on, and base my rate probably on the 
cost of reinsuring the risk. 

Mr. Lehlbach. But did you not say you would want 1 6 ascertain 
what that cost would be before quoting a rate? 

Mr. Ryan. That would be the natural process. 

Mr. Lehlbach. Well, then, I do not see that I have materially mis¬ 
quoted you, Mr. Ryan. 

Mr. Campbell. It could be done by telephone call to the office in 
New York. 

Mr. Ryan. There would be no substantial delay in giving a man 
that quotation. 

Mr. Burchmore. The statement of Mr. Llerrick, Mr. Chairman, 
contradicts the assertion. 

Mr. Lehlbach. I know; but, of course, Mr. Herrick’s statement 
does not bind this statement. 

Mr. Burchmore. The witness now says it is uncontradicted, and I 
call attention to the contradiction by Mr. Herrick. 

Mr. Hickox. I do not wish to be in any dispute with any witness 
on a simple question of fact. Mr. Herrick stated, as I recall it, that 
some representative of his in Chicago endeavored to find—endeav- 


378 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

ored to ascertain—what the rate would be if they had an unlimited 
liability, and he had difficulty in finding* it. I do not dispute that 
he may have had such difficulty, but I do say that anybody who had 
attempted to ascertain those circumstances in the port of New York 
would not have to wait half an hour in order to get the information 
from the steamship company, and that is the way in which the busi¬ 
ness has been done in the port of New York, certainly as long as 
my recollection extends, and I have no doubt farther back still. 

Now, the very fact that the Canadian Government incorporated 
this $100 limit in its bill of lading—in its water carriage of goods 
act—some 17 years after the Harter Act had been passed here, is a 
fairly strong indication of the feeling that they had in Canada as to 
the propriety of such a limitation in a bill of lading. They made it 
part of the basic law of the land. So far as other maritime countries 
are concerned, without referring to every bill of lading of every 
steamship company, it may be stated that substantially the same 
thing does appear in all the bills of lading that are in use in general 
trades. 

Eeference was made to the fact that in an Australian bill of lading 
there was a higher limitation of value, I think, of about $1,000. 
That condition arose several years ago as the result of competitive 
conditions. It is confined to that particular trade, and we do not 
find it in the bills of lading generally of the English or other foreign 
steamship companies, Canadian companies, nor companies trading 
out of the United States. 

I think, therefore, that whatever may be said in the matter of 
principle as to the advisability of the Harter Act the matter must be 
disregarded in considering this question of theft and pilferage, 
because the two have no possible connection whatever. 

Mr. Kirkpatrick. Before you leave the Haider Act, Mr. Hickox, I 
want to ask you one question. 

Conceding that what you say is true, that the law has been settled 
for the last 10 or 15 years by decisions of the court, do you not really 
think that the early decisions of the courts under the Harter Act, 
and the practices that have grown up under those decisions, have re¬ 
sulted in perpetuating a condition which the Harter Act was really 
meant to abolish ? 

Mr. Hickox. Not at all. If you will read the testimony that was 
given on this investigation, the hearings on the Nelson bill, you will 
see that the suggestion which has been thrown out to you by one 
or another of these witnesses on Monday or Tuesday, that by some sly 
necromancy the Harter Act has been changed from its original in¬ 
tention is not so. 

Mr. Kirkpatrick. I base my question simply on the language of 
the Harter Act without any such suggestions. 

Mr. Hickox. You will find, if I may answer you further in this 
way, that the testimony on this investigation deals with the act as it 
was originally proposed in Congress. The language of the act as 
proposed was not the same as that finally passed, and according to 
the witnesses here the act as finally passed was altered in order that 
it should express just exactly what it did and cover the things which 
are included, we will say, in the court’s construction of it. 

Mr. Kirkpatrick. I see what you mean. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 379 

Mr. Hickox. Now let me say one tiling further. One person or 
another may read the language of the statute and come to some con¬ 
clusion as to what that statute means. We have not yet reached the 
stage where statutes are drafted with such clarity that there can not 
be any possible doubt as to the meaning of the words. We must, of 
course, have some means or some standard by which they are to be 
judged, and the only thing that we can possibly do is to leave it, 
under our system, to the determination of the courts. 

Mr. Kirkpatrick. I said the decisions of the courts and the prac¬ 
tices which those decisions have—possibly unwittingly—permitted. 

Mr. Hickox. All I can say on that is that if you do not agree with 
the view of the court as to what- the language means, that, of course, 
is your opinion as against the opinion of the court, and if the ma¬ 
jority of people should agree with you, something would have to be 
done to change it, to change the situation. But I think it would 
scarcely be fair for anyone or any considerable number of indi¬ 
viduals to say as a fact that the decisions of the Supreme Court in 
dealing with a particular statute had nullified the plain effect.of the 
language. 

Mr. Kirkpatrick. Well, I did not say that, but sometimes a court 
hands a decision down without foreseeing all that can be done under 
that decision and all the consequences of that decision, and that is 
why I included not only the decisions of the court, but the practices 
that they permit. 

Mr. Hickox. Well, that is possible, but the different phases, or 
different sorts of circumstances have been before the consideration 
of the Federal courts and of the Supreme Court on numerous in¬ 
stances, and the present state of the act, if I may so describe it, is not 
the result of any one decision at all. 

Mr. Laws. Will you give this committee this point while you are 
right there: Is there any decision prior to 1919 in which it has been 
expressly held that under the Harter Act the limitation of liability 
to $100 is valid ? 

Mr. Hickox. There were numerous decisions. 

Mr. Laws. Give us one. 

Mr. Hickox. I can not give them to you at my fingers ends. 

Mr. Laws. That is all I wanted to ask you. 

Mr. Edmonds. Will you supply that? 

Mr. Hickox. It would make it necessary for me to make a digest 
of the cases in the Federal court. 

Mr. Edmonds. Just give us two or three decisions. Surely you 
know the decisions in an important case like that. 

Mr. Hickox. No ; because nobody, so far as I know, until this time 
that Mr. Laws speaks about, ever raised any question about it. No¬ 
body supposed that there was the slightest question about it. Now 
let me read to you what the Supreme Court has said. 

Mr. Laws. That was a railroad case. 

Mr. Hickox. I am sorry to deprive you of the opportunity, Mr. 
Laws. In 1884, the Supreme Court of the United States dealt with 
a valuation clause of $100 in a bill of lading—and I am merely an¬ 
ticipating now what I was about to speak of in connection with the 
discussion of this bill-of-lading clause. In that case of Hart against 
the Pennsylvania Kailroad Co., 112 U. S., 331, pages 340, 341, this 


380 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


language appears—and I think it is so illuminating on this particu¬ 
lar subject that I ask permission to read it to you. This is the lan¬ 
guage of the court: 

The limitation as to value lias no tendency to exempt from liability for 
negligence. It does not induce want of care; it exacts from the carrier the 
measure of care due to the value agreed upon. The can* er is bound to re¬ 
spond in that value for negligence. The compensat on for carriage is based 
on that value. The shipper is estopped from saying that the value was greater. 
The articles have no greater value for the purposes of the contract of trans¬ 
portation between the parties to that contract. The carrier must respond for 
negligence up to that value. It is just and reasonable that such a contract, 
fairly entered into and where there is no deceit practiced on the sh pper, should 
be upheld. There is no violation of public policy; on the contrary, it would 
be unjust and unreasonable, and would be repugnant to the soundest prin¬ 
ciples of fair dealing and of the freedom of contracting, and thus in conflict 
with public policy, if a shipper should be allowed to reap the benefit of the 
contract if there is no loss and to repudiate it in case of loss. 

Now, there is a flat decision by the Supreme Court, which is the 
only tribunal to which we can look for ultimate guidance in the 
matter-, that in their opinion the limitation as to value in a bill of 
lading had no tendency to exempt from liability for negligence. 

Mr. Kirkpatrick. What is the date of that ? 

Mr. Hickox. 1884, nine years before the Harter Act was passed. 
And all that the Harter Act in substance says is that the shipowner— 
on this particular point—is that the shipowner shall not insert any 
clauses in his bills of lading which shall relieve him from liability 
for negligence in the loading, stowage, custody, or care of the cargo. 
Now, I can not conceive, in view of that language, how any sane man 
could have expected that the Supreme Court would ever say any¬ 
thing else, if the question ever came before them, than that the limi¬ 
tation of $100 in a bill of lading was not in. violation of this provi¬ 
sion of the Harter Act; and if the gentlemen who think to the con¬ 
trary urge on you that you should take that view, I can only refer you 
to the language of the court itself. 

Now, the other clause, the second clause, is somewhat inconsistent, 
I think, with the first suggestion by the underwriters, that the bill 
of lading clauses, compressing the carrier out of liability have caused 
these thefts and pilferages. It is a little difficult, perhaps, to see 
how there can be these two clauses, which are quite different, work¬ 
ing along hand in hand to produce the same result. But what is 
there in the clauses of a bill of lading which has been suggested to 
you as leading in any way to the commission of theft or pilferage ? 

You have heard some of these witnesses suggest that the carrier 
has exempted himself from every possible liability under the bill of 
lading, and therefore there is no liability assumed, and if a case of 
damage arises there is no use presenting it against the carrier because 
it will be repudiated under one of these clauses. Nothing can be 
farther from the facts than that. No experienced lawyer would 
assume to say to you that the specification of exceptions in a bill of 
lading relieved a carrier absolutely from liability for damage caused 
by any of those exceptions. He knows that it is not so. There are 
various exceptions, for instance, included in a general clause, usually 
comprising acts of God, and, among other things, theft and pilferage 
or leakage, and what not. Now, what the specification of those 
clauses in a bill of lading means is this and only this: That if a loss 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 381 


occurs which the carrier can show is due to one of the excepted causes, 
the burden of them showing negligence is on the shipper; if the car¬ 
rier can not show that the particular loss or the claim for damage was 
due to some one of these excepted clauses, he can not take advantage 
of those exceptions in the bill of lading and he necessarily loses, and 
the way in which the thing works out in practice is just that way: A 
claim is presented to a steamship company, and it may be that the 
cause of the damage is not clear; the carrier must first show how the 
damage was caused, and if he fails in doing that the court says, “ It 
is a case of unexplained damage and the carrier is liable.'’ Now, 
there is no possible question about that as an actual statement of law. 

Then, if he can show that the loss or the claim for damage, we will 
say, was due to breakage, then, by reason of the insertion of that 
clause in the bill of lading the shipper has the obligation of showing 
that the carrier’s negligence or the negligence of the employees, 
whoever they may have been, brought that breakage about. And the 
reason of that is that, as a matter of ordinary fair dealing, there is no 
reason on earth why a carrier should be liable for something which 
his negligence has not caused. Now that is not merely a view which I 
express to you on behalf of the shipowners, but it is a view which 
is acquiesced in by certainly a considerable number of shippers and 
by some of the people who have actually testified before you during 
these last three days. 

Last year there were hearings before the Interstate Commerce 
Commission on the question of such changes, if any, as might seem 
desirable in the through export bills of lading. We had hearings, as 
I think Mr. Loines has suggested, in Washington, Chicago, and again 
in Washington, and some of the gentlemen who have testified here to¬ 
day, testified at very much greater length on those hearings. We 
had the packers’ representatives; we had the National Industrial 
Traffic League; we had Mr. Burchmore; we had the chewing-gum 
manufacturers; and we had various others, and as a result of various 
powwows during the course of that investigation a form of through 
export bill of lading was submitted to the commission, which con¬ 
tained the suggestions of the ocean carriers, and also contained any 
differing suggestions on the part of the shippers whose interests were 
mainly conducted at that time by the Industrial Traffic League. 

Now, I do not suppose it is any wish on the part of this committee, 
especially at this very late hour, that I should discuss in detail any 
of the conditions of this export bill of lading, but perhaps I may just 
say very shortly that it covers two and possibly three pages of 
transcript. 

First, the carriage from the point of shipment to the seaboard: 
next, the ocean carriage; and, third, the further carriage at the end 
of the ocean carriage, if indeed there is such a third. 

Now, I would like to submit to the committee a copy of the memo¬ 
randum that we submitted with this printed form of bill of lading, 
which will show you on one side the clauses substantially as they 
were in the through export bill of lading in effect since 1899, with 
possibly slight changes that might have been agreed on between the 
ocean carriers and the shippers, and the points of difference, set out 
on the margin so that you will clearly see them, suggested by the 
Industrial Traffic League. 


382 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Mr. Lehlbach. The committee will be glad to have that. 

Mr. Hickox. And you will find that there are comparatively very 
few serious points of difference—very, very few—and the particular 
point that I was dealing with in this matter is the suggestion that 
the proposal of the Industrial Traffic League, in place of the specifi¬ 
cation of exceptions in the bill of lading which are largely objected 
to by the shippers, was this clause: 

The ocean carrier shall not he liable for loss, damage, delay, or default 
occurring from any cause whatsoever, except where the negligence of the ocean 
carrier is the proximate cause of the injury complained of. 

Mr. Lehlbach. Does the bill of lading deal with the question as to 
where the burden of proof should lie? 

Mr. Hickox. No ; that suggestion does not say anything about that. 

Mr. Lehlbach. I mean anywhere else in the bill of lading? 

Mr. Hickox. No. 

Mr. Burchmore. May I call the attention of Mr. Hickox to the 
fact that the bill-of-lading form actually submitted by the league 
in that proceeding, of which Mr. Bentley offered a copy here when 
he testified, was amended from the copy you have before you by the 
insertion of the very words “ the burden of proof of negligence shall 
be upon the carrier.” 

Mr. Hickox. I did not know about that if it was so, because this 
is what we submitted. 

Mr. Lehlbach. That was my recollection, and that is why I asked 
that question. 

Mr. Burchmore. And it was so printed in our brief in that pro¬ 
ceeding. 

Mr. Hickox. I can only say that this is what we understood was 
the last word of the Industrial Traffic League, and we printed this 
and submitted it to the commission accordingly. 

Mr. Burchmore. In justice to Mr. Hickox it just occurred to me 
that that suggestion was added after the hearing and before the 
filing of the brief. 

Mr. Hickox. I never heard of it before. 

Another circumstance which shows—I think quite conclusively— 
that these specifications of exceptions in the bill of lading can not 
be the cause of the theft and pilferage is the fact indicated by the 
rates of the insurance companies. We find that on shipments of 
whatever kind of cargo from the port of New York to England or 
continental ports the rate for theft and pilferage previous to the 
war was a percentage which I understood to be described as sub¬ 
stantially negligible. 

Mr. Lehlbach. About a quarter of 1 per cent. 

Mr. Rush. To Europe. 

Mr. Hickox. To Europe; yes. During the war that rate rose to 
1 or 2 per cent. What was it, Mr. Rush? 

Mr. Rush. About 2 per cent or 2J—somewhere around there. 

Mr. Hickox. Well, 2 per cent. At the same time the rates to 
South America, which seemed to be the great bone of contention 
here, rose to 10 or 15 per cent and were so high that at least one of 
the companies declined to insure for a certain period commodities to 
that country. Well, now, we also find that on the delivery of cargo 
to South America the ship discharges into what I described as 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 383 

“ fiscal wharves ” that are controlled by the Government and the 
customhouse. So that you will easily see that on a vessel, say, a tramp 
vessel, or a vessel of some of these English owners which sometimes 
operate in transatlantic trade to Europe or England and sometimes 
to South America, you have got two constant factors—that is, you 
have got the laboring or loading personnel in the port of New York, 
and you have got the personnel on the ship and the differing factors 
in the two instances and the conditions at the port of discharge in 
Europe, and the conditions in the port of discharge in South Amer¬ 
ica. Now, that, as I submit, is an absolute demonstration that if the 
rates for the carriage by the same kind of steamer, and possibly the 
very same steamer, of valuable cargo, or cargo that is subject to 
pilferage, largely to South America results in such very large claims 
of pilferage that the source of the trouble must be looked for right 
there, because manifestly if the difficulty was one that existed at the 
port of New York you would not find any such disparity between the 
rates for carriage to the two ports. 

Mr. Edmonds. Have any of your clients ever taken enough interest 
in it to submit to the State Department or to the Department of 
Commerce the statement of these tremendous losses in South America 
and ask that they make it the subject of conversation with the Gov¬ 
ernments down there? 

Mr. Hickox. I can not say as to that. 

Mr. Edmonds. Naturally I would think that they would do that 
through their office. 

Mr. Hickox. Quite true, but I am not their alter ego, and I can 
not tell. 

Mr. Edmonds. They did not do it through your office, you can say? 

Mr. Hickox. They did not do it through me. That is all I can 
say. Whether the subject has ever been discussed by anybody else 
in the office I do not know. 

Mr. Edmonds. They did not betray sufficient interest after it left 
their hands to try and endeavor to trace this loss up ? 

Mr. Hickox. Well, I do not know what they could do. No sug¬ 
gestion has been made here of what a steamship company could do 
with respect to cargo that goes into the hands of fiscal agents of 
these South American ports. 

Mr. Edmonds. Now, due to the losses that occur through those 
ports, can you not make representations to the Department of Com¬ 
merce of those losses and have them take it up with the State De¬ 
partment? 

Mr. Hickox. If that is a suggestion which seems feasible to the 
committee, perhaps it can be acted on. 

Mr. Hdmonds. Surely the representations of the merchants en¬ 
gaged in this commerce that steps were necessary in order to pre¬ 
vent these losses in # commerce would be listened to by the foreign 
country. 

Mr. Hickox. That may be a very useful suggestion. 

Mr. Edmonds. It looks to me as if you just dumped it overboard 
there and let it go and never paid any more attention to it. 

Mr. Hickox. Well, I presume that any carrier, express company, 
or railroad company or water carrier on the completion of the transit 
was very glad to be done with it. 


384 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Campbell. Has the United States Government, the owner of 
80 per cent of the American ships, taken it up with its own State 
Department? 

Mr. Edmonds. I do not know. 

Mr. Campbell. Have you as a trustee of the American people, Con¬ 
gressman, urged the State Department to take it up? 

Mr. Edmonds. I am waiting to get somebody to tell me the story. 
That is the reason I am asking these questions. I should have 
thought that that would appear as a possible way of preventing 
these losses. It looks to me as if you folks, after you got to the end 
of the title, were just glad to get rid of it. 

Mr. Hickox. It has just been suggested to me, since you spoke, that 
the representatives of the lines running into Santo Domingo did ask 
the United States representative at that point to take some action and 
make some representations to the Government on the subject, though 
nothing further has been heard about it. 

Mr. Lehlbach. Have you concluded, Mr. Hickox? 

Mr. Hickox. No ; but i shall in a very few moments. 

Mr. Lehlbach. I did not mean to limit you, but I wanted to know 
whether you were through. 

Mr. Hickox. There is only one further feature that I wish to speak 
about. If in consequence of an amendment to the Harter Act, or 
the passing of any other legislation, the shipowners are required to 
assume a liability, which they have not now under their bills of lad¬ 
ing, in whatever form it may be put, it is, I think, the plainest of 
business propositions that the shipowner, if he incurs a greater risk, 
involving a greater financial responsibility, must receive an additional 
compensation, otherwise he can not stand it. If you were dealing 
with a situation where the steamship company was making what may 
be regarded as exorbitant profits, there might be some indication for 
suggesting that possibly those profits should be kept down by putting 
on the steamship companies a greater liability than they had been 
accustomed to bear. We know, however, that at the present time 
steamship companies have exceeding great difficulty in living, and 
I am not even sure that you can fairly say that the United States 
Shipping Board vessels at the moment are living; at any rate, they 
are not able to make any kind of a profit; a very great number of 
them are not operating at all, because they can not be operated at a 
profit, and if they should be started out with the idea of incurring a 
greater liability than steamship companies have been incurring for 
many, many years—ever, so far as we know—I think it would be 
impossible to suppose that the thing could be done as a practical 
measure. 

If vou are going to require the shipowner to assume the additional 
liability, he has got to cover himself in some way, and he will either 
have to insure himself in such a way that he will have to pay 
premiums to an insurance company to get insurance on his cargo, 
which, acting in accordance with sound business principles, will vary 
in accordance with the risk, and if the risk is great the premium will 
have to be high—they will have to do that, and they will have to get 
their compensation for that additional amount out of the freight, 
because that is the only possible source of revenue the steamship 
company has. Now, if the steamship company then has to charge 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 385 

freight rates which are very much greater than they are now, it is 
exceedingly to be doubted whether the situation of the shipper is 
going to be improved in any way, and unless it can reasonably be 
seen that the result is going to be a benefit, it is perhaps obvious that 
existing business conditions should not be tampered with. 

Mr. Lehlbach. Mr. Hickox, you have dealt with certain of the 
limitations in the bills of lading. How can you justify morally a 
provision in a bill of lading which divests you or the shipowner 
of liability for negligence to the extent that the shipper may have 
been insured against damage? 

Mr. Hickox. I do not, and no such clause in a bill of lading is 
valid. 

Mr. Lehlbach. But they are frequently put in. 

Mr. Hickox. It may be that they are in some bills of lading, 
but- 

Mr. Lehlbach (interposing). And apparently there must be some 
attempt on the part of the shipowners to impress them, otherwise the 
practice of loan receipts would not have grown up. 

Mr. Hickox. I do not think that is true. A great many clauses 
which you find in bills of lading are handed down from past genera¬ 
tions. A great many of them come from British bills of lading, 
where the marine laws are far more liberal to the shipowner than 
they are here. In the very important particular—I mention one so 
as not to prolong the discussion unduly—in Great Britain it is legal 
for a shipowner or a common carrier to contract against the conse¬ 
quences of his own negligence. Under United States law it is not 
possible to do that; it can be done under the laws of some of the 
States of the Union, but the policy of the United States courts does 
not permit it. Now, some conditions which, perhaps, would be valid 
under a British bill of lading may have been translated into a bill 
of lading printed on this side and used for shipments from this side. 
There may be clauses in such a bill of lading which are not valid 
under our law. I have frequently seen such clauses myself. There 
has been an attempt, for instance, to incorporate in a bill of lading, 
we will say, a clause dealing with one statute or another. I have 
particularly in mind section 4281 of the Revised Statutes, which 
deals with the carriage of precious stones, and the fact that the 
carrier shall not be liable as carrier in any form or manner if some¬ 
thing is shipped by him as ordinary cargo and really contains 
precious stones or jewels and the value is not declared. 

Mr. Edmonds. I guess those sections do not mean anything. They 
just put them in to make it harder. 

Mr. Hickox. Well, all bills of lading are not drafted, perhaps, 
with a good deal of skill, and although I have no particular ones in 
mind, you will find that in the vast number of bills of lading that 
are used in the shipping trade there are some that are of ancient 
date and they do not conform with existing conditions. But an 
illegal condition in a bill of lading does not do anybody any harm. 
Shippers are not terrorized by those things, and so far as under¬ 
writers are concerned, well, I think that any of their attorneys would 
regard it as a distinct slight if it was suggested that they were dis¬ 
turbed by the presence of clauses in a bill of lading which they felt 
and knew to be illegal. 

60683—21-25 



386 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

It is purely, I think, a question of insurance that is involved here, 
and if the risk is one which the present insurance companies do not 
feel like taking, and it has to be imposed on the carrier in some 
other way, the cost is bound to come out of the shipper, out of the 
goods, because there is no other source of revenue unless, as I say, 
you should reach the conclusion that the carrier is making so much 
profit that some of it could reasonably be cut down to cover this 
additional expense. 

The nub of the whole thing is just this: That if the limitation of 
$100 in the bill of lading is cut out, an underwriter who insures a 
. shipper of goods will be able, on collecting his premium when a loss 
occurs, to pay the loss to the shipper and then recover the loss from 
the steamship owner. There are comparatively few classes of injury, 
or conditions of injury to packages, which an underwriter pays to a 
shipper, which the underwriter is not able to enforce against a ship¬ 
owner in due course. I speak from a considerable amount of ex¬ 
perience on that subject. What they find in many instances is that 
a shipper has a cargo or a package, if you please, which is worth 
$1,000, and he insures it with the underwriter for—well, for $1,000— 
and when a loss occurs the underwriter may pay that amount, but the 
shipper in going to the steamship company has presented the package 
to the steamship company as one that was worth only $100, and he 
has paid a rate of freight commensurate with a $100 risk. 

Mr. Edmonds. Does he himself mark that figure “ $100,” or do you 
assume that it is worth $100 because he puts no value on the package ? 

Mr. Hickox. That is the assumption, because shippers by ocean 
carrier know perfectly well that a clause of that kind is contained in 
the bill of lading, and if they do not know it they are charged with 
knowledge, because they can read it and they can find out. But no 
shipper who has ever had any experience in shipping goods for export 
is in any doubt whatever that such a clause is contained in bills of 
lading, in all bills of lading. 

Mr. Edmonds. In other words, he knows it is useless for him to 
place any greater value on it, because $100 is your limit? 

Mr. Hickox. No ; on the contrary he knows perfectly well that if he 
is willing to state the true value and pay the freight on it, he can get 
the value stated on his bill of lading which will be exactly what he 
says. 

Mr. Edmonds. Do you not carry lower classes of freight for less 
money, the same as they do on the railroads ? 

Mr. Hickox. I can not speak as to the tariff and the classes that 
may be generally graded, but the statements are made here by the 
people of the steamship companies that if application is ever made to 
them by a shipper to state a value on a bill of lading, $100 or $2,000 
or whatever it may be, that that will always be done by the steamship 
company, and a rate charged accordingly, and number of these steam¬ 
ship people have told you that they charge an increased acl valorem 
rate, which varies according to the trade and to the kind of goods. 

Mr. Edmonds. All right, but you have got class A freight which 
you have got a price on, say, of $1 a hundred. That is based on the 
assumption that the package is only worth $100 ? 

Mr. Hickox. I think it is. 

Mr. Edmonds. You do not state so in your freight rates. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 387 

Mr. Hickox. No ; that may be so. 

Mr. Edmonds. You establish the freight rate and say the price is 
$1 a hundred for wool, we will say. The package may be worth 
$1,000, but if the man does not state any price on it, you accept it 
at $100. 

Mr. Hickox. It is accepted by the steamship companies at $100 and 
the shipper knows that, as the bill of lading states, the value of that 
package is represented by $100, unless a greater value is stated. 

Mr. Edmonds. But your freight classifications do not say so. You 
say wool is worth $1 a hundred. 

Mr. Hickox. But the freight classifications do not say anything 
about the value of commodities. If you think they do. then you will 
have to ask the practical tariff men just what the tariffs do show. 

Mr. Edmonds. We will get the tariffs. 

Mr. Hickox. However that may be, the steamship people all say 
that if the true value is stated by the shipper that value will be put 
on the bill of lading and the rate of freight charged accordingly. 
For instance, you speak of the tariff as showing the values. Ref¬ 
erence has been made to silks. Some silks are very valuable and 
some are not. 

Mr. Edmonds. I agree with you; but silks come under 4281. a little 
different proposition. We will take your ordinary class A freight, 
$1 a hundred. If wool was class A freight, he would figure that was 
your rate on wool. 

Mr. Hickox. If he had a package which was worth more than 
$100, he knows perfectly well that he is getting a freight rate at less 
than the actual value, and if he wished to secure himself in case of 
loss he would ask for the increased value. 

Mr. Edmonds. I can not quite follow you there, because if your 
freight rates mean anything at all, they mean the freight rate on wool 
is $1 a hundred. 

Mr. Hickox. I assume that the freight rates are a general classi¬ 
fication; and whether the tariffs say that freight rates on all kinds 
and classes of wool are $1 a hundred, you will have to ask one of 
these other people. 

Mr. Edmonds. We will not do that to-night, but we will look into 
it later. 

Mr. Hickox. That is a detail on which I can not speak. 

Mr. Laws. Mr. Chairman, I knoAv it takes a lot of nerve, but I 
would like to ask one or two questions on this proposition if you are 
through. 

Mr. Lehlbach. It is 11 o’clock, and we have some other witnesses. 
We can not sit to-morrow. We have got to conclude these hearings 
to-night, and we are taking entirely too much time on minor details. 

I simply wish to say, Mr. Hickox, you requested that the hearings 
in toto before the Senate Committee on Commerce be printed in our 
hearings. On examination I find that to be a pamphlet of 168 pages; 
and while the committee wants the record as complete and full as 
possible, it is very unusual to take one public document and reprint 
it as an insert in the hearings before another committee in another 
public document; and I do not know whether the committee can find 
a place, with due regard for the size of its own record, for the entire 
volume of the Senate hearings. 


388 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Mr. Hickox. I suggested the whole pamphlet because I did not 
wish to select portions which I thought were applicable. 

Mr. Lehlrach. If you could prepare abstracts within a reasonable 
time of what is peculiarly pertinent in this Senate hearing, we will 
be glad to incorporate that with your remarks, but I do not think 
the committee will find it a practical proposition to reprint the entire 
document. 

Mr. Hickox. Well, I should not like to abstract somebody’s testi¬ 
mony. 

Mr. Lehlbach. As a matter of fact, this is a public document and 
undoubtedly accessible to members of the committee and to others 
who have an interest, and can be obtained from the document rooms. 
If necessary, it can be reprinted, if the first edition is exhausted. So 
in order to have access to it, it will not be necessary to print it in our 
hearings anyhow. 

Mr. Hickox. Very well. 

Mr. Lehlbach. Now, Mr. Campbell, we will hear you. 

STATEMENT OF MR. IRA A. CAMPBELL, NEW YORK CITY. 

Mr. Campbell. Mr. Chairman, I appear here representing the 
American Steamship Owners’ Association, which is comprised of 
practically all of the principal American steamship companies, 75 
or 80 in number, and I submit a list of the companies as they were a 
short time ago. I do not have the list down to date. 

(The list referred to follows:) 


MEMBERS OF THE AMERICAN STEAMSHIP OWNERS’ ASSOCIATION. 


Alaska Steamship Co. 
American-Hawaiian Steamship Co. 
American Italian Commercial Corpora¬ 
tion. 

American Transportation Co. (James 
W. Elwell & Co.). 

Associated Oil Co. 

Atlantic Refining Co. 

Barber Steamship Lines (Inc.). 

Bliss, Dallett & Co. (Red “ D ” Line). 
Bull, A. H., Steamship Co. 

Caribbean Steamship Co. (Ltd.). 

Chile Steamship Co. 

China Mail Steamship Co. (Ltd.). 
Clinchfield Navigation Co. (Inc.). 

Clyde Steamship Co. 

Coastwise Transportation Co. 

Colonial Navigation Co. 

Crowell & Thurlow Steamship Co. 
Dollar Steamship Co. 

Eastern Steamship Lines (Inc.). 
France & Canada Steamship Corpora¬ 
tion. 

Freeport Sulphur Transportation Co. 
Garland Steamship Corporation. 
Gaston, Williams & Wigmore Steam¬ 
ship Corporation (Globe Line). 
Grace, W. R., & Co. (Atlantic & Pa¬ 
cific Steamship Co.). 

Green Star Steamship Corporation. 
Gulf Refining Co. 

Gulf & Southern Steamship Co. 


Harriss, Magill & Co. (Inc.). 

Hartford & New York Transportation 
Co. 

Inter-Island Steam Navigation Co. 
International Mercantile Marine Co. 
Luckenbach Steamship Co. (Inc.). 
Mallory Steamship Co. 

Maru Navigation Co. 

Matson Navigation Co. 

Merchants & Miners Transportation 
Co. 

Moore & McCormack Co. (Inc.). 
Munson Steamship Line. 

New England Fuel & Transportation 
Co. 

New England Steamship Co. 

New York & Cuba Mail Steamship Co. 
New York & Porto Rico Steamship Co. 
Ocean Steamship Co. of Savannah. 
Oceanic Steamship Co. 

Old Dominion Steamship Co. 

Ore Steamship Corporation. 

Oriental Navigation Co. 

Pacific Mail Steamship Co. 

Pacific Steamship Co. (Admiral Line). 
Pan American Petroleum & Transport 
Co. 

Peninsular & Occidental Steamship Co. 
Pocahontas Fuel Co. (Inc.). 

San Francisco & Portland Steamship 
Lines. 

Seaboard & Gulf Steamship Co. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 389 


Shawmut Steamship Co. 

Smith, R. Lawrence (Inc.). 

Southern Pacific Co. 

Southern Steamship Co. 

Sprague, C. H., & Son. 

Standard Oil Co. of New Jersey. 
Standard Oil Co. of New York. 

States Marine & Commercial Co. 
(Inc.). 

Strachan Shipping Co. 


Sun Co. 

Susquehanna Steamship Co. (Inc.). 
Swayne & Hoyt (Arrow Line). 
Texas Steamship Co. 

Union Oil Co. of California. 

Union Sulphur Co. 

United Fruit Co. 

United States Steel Products Co. 
Vacuum Oil Co. 

AVarren Transportation Co. 


The membership of the American Steamship Owners’ Association 
owns about 80 per cent of all of the American privately owned ton¬ 
nage engaged in foreign trade. That body of tonnage and the 
United States GoA-ernment, through the Shipping Board, which 
OAA : ns the Shiping Board vessels, is vitally interested in this question. 
My associate, Mr. Hickox, has so thoroughly covered many of the 
legal aspects of it that I am not going to keep you at this late hour 
to go.o\ T er, so far as I can a Amid it, anything that he has said. 

This hearing was called, supposedly, to consider the question of 
theft and pilferage, and it has passed from that into a very much 
broader question, a question which, in my judgment, concerns deeply 
the future of American export business and the American merchant 
marine, and this committee which is sitting here stands exactly in the 
same position as I do; it represents 80 per cent of the American mer¬ 
chant marine, in which I have a very small interest, so that I am 
speaking, I hope and I know, to people who do stand and should 
stand in common sympathy with me. 

So far as thefts and pilferages are concerned I can not see Iioav 
the members of the committee who have sat through this hearing to¬ 
day can reach any other conclusion than that the American steamship 
owners are doing everything that is humanly possible to cut doAvn 
these losses. We have been criticized, Ave haA r e almost been called 
names during the last two days by our critics and yet not one critic 
has come forward and made a single suggestion for the improAmment 
of the condition except one, namely, to pass the responsibility on to 
the shipowner that he does not have to-day; and that very thing, as 
1 hope to demonstrate before I get through, is the most fatal step 
that the shipper can take for his interest and that the American 
underwriter can take for his interest. To my mind it is, so far as the 
American cargo underAvriter is concerned, it is walking the plank, 
and the efforts of your committee in the past to build up this Ameri¬ 
can merchant marine insurance business is going for naught if you 
take this fatal step, and I hope to establish that fact before I get 
through. 

I say they have come here and they have simply said that they had 
these losses. We know it. Have Ave participated in them? When 
the Ward Line told you they paid $345,000 they know something 
about those losses. It is true the underAvriters have suffered great 
losses, as Mr. Rush gaAm the figures, but Mr. Rush did not tell you 
Iioav many of those thousands of dollars that he had paid out he has 
recovered from the steamship companies and he is expecting to re¬ 
cover from the steamship companies through his distinguished and 
astute counsel. They are after us. There are suits galore pending, 
and they are pressing them just as hard as they can, and they have 
had many, many successful suits. 


390 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Now, the condition, as Mr. Hickox has said, is one that grew out 
of the war. It is a disease. It is everywhere. But are you going to 
apply a remedy which is worse than the disease ? I say that you are 
if you adopt the course that these men suggest. This thing is curing 
itself. It is cured to-day by the reduction in these losses. Unless 
these steamship people are not telling you the truth, it is very evident 
that these losses are being reduced down very materially. 

Who is the one that is being benefitted by the reduction in the 
losses? It is the American shipper, because he is getting his goods 
forward to his consignee, and he is building up his business the way 
he wants to. Is the American underwriter standing behind him 
to-day and reflecting his improved condition? Not on your life. One 
man sits here and says that his company is refusing to write theft 
and pilferage? Why? Because he is judging the present by the 
past. He did not even know of the improved condition that existed 
in the theft and pilferage situation, because he was refusing to write 
those losses. But he is to-day, as he told you this afternoon, paying 
losses in 1921 for thefts that took place in 1919 and 1920. He is judg¬ 
ing the present by the conditions that existed at that time as they 
grew out of the war, during this great moral breakdown throughout 
the world. Instead of refusing to give the American shipper the 
benefit of your insurance against theft and pilferage under these ex¬ 
isting conditions, after having charged them the rate up to 2 per cent 
in Europe and South America up to 15 per cent—instead of refusing 
to insure them at all under the improved conditions he ought to be 
here saying to the American shipper, “ We are prepared to reduce our 
rates.”' 

No, the trouble is that the American underwriter is suffering from 
the same thing that yOu are suffering and this man is suffering and 
the other men are suffering who bought anything during this period 
of high prices. What? Why, he has sofd an article, namely, his 
insurance, for a certain premium, and he finds that his losses are ex¬ 
ceeding his premiums. So have I. I have bought certain things dur¬ 
ing the last two years, and I find that my stuff has depreciated in 
value and I am taking the loss. And the American banker and the 
American shipper are going to take losses on the 25 or 30 or 40 mil¬ 
lion dollars worth of goods tied up down there in Buenos Aires. And 
so the American underwriter is taking a loss, but the American under¬ 
writer is not coming forward to-day, apparently—at least one com¬ 
pany it not—coming forward to-day and offering the American ship¬ 
per cargo insurance against theft and pilferage based on existing con¬ 
ditions. Now, what does he propose? He proposes, Mr. Chairman, 
not to cure, not to take from the Harter Act—but to put into the 
Harter Act by amendment—a provision which will make it possible 
to not write into the bill of lading the exception against theft and pil¬ 
ferage. The exception against theft and pilferage in that bill of lad¬ 
ing does not excuse the carrier if he is negligent. The only effect in 
the world under any of the decisions of that is, as Mr. Hickox has 
pointed out. that if the cargo underwriter, or if the shipowner demon¬ 
strates that there has been a theft, then the burden of proof of negli¬ 
gence is upon the shipper. Now, let me read you a short excerpt from 
a decision on that point, in 162 Federal. A shipment of Brussels was 
short delivered. In an action by the consignee against the ship it was 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 391 


held that it was incumbent upon the ship to show that the Brussels 
were stolen by someone not belonging to the ship, and there being 
no proof of robbery, the vessel is liable and release from liability can 
not be obtained under the Harter Act, under one of those exceptions. 
That is all any exception does. It is an exception which, if the ship¬ 
owner, as Mr. Hickox pointed out, can demonstrate that there was a 
theft, it shifts the burden of proof to show that there was negligence, 
but if he establishes the negligence, as you implied in your hypo¬ 
thetical question to-day, you can win your case in any court. And 
Mr. Amberg will tell you that is so. 

Now, what will you do? Dealing with that question—and that is 
the only question they have brought forward here showing a justifica¬ 
tion for increasing the insurance rates—do they come here with a pro¬ 
posal to deprive you of that right? No; they come here with the pro¬ 
posal to wipe the Harter Act off the statute books, absolutely. Now, is 
that legislation that this committee wants to recommend to Congress 
and to put through Congress in the interest of the American shipper 
or the American shipowner or the American Government as a ship¬ 
owner? I say no. Let us see what the practical situation of that 
would be. 

It means that the American shipowner will become liable as an in¬ 
surer against all excepting two things, two causes of loss, the acts of 
God and of public enemies, under this proposal. It means that if an 
American ship is in collision because a sailor standing on lookout in 
f °Sgy. weather fails to report a whistle that he hears to his officer and 
a collision results; or if an American officer standing on the bridge of 
his steamer hears a distant whistle in the fog and he neglects to stop 
his engines when he hears that whistle, and a collision results, it means 
that the American shipowner would have to pay the loss on the cargo 
that resulted from that collision. Now, what in the name of goodness 
has that got to do with theft and pilferage? And yet theft and pil¬ 
ferage losses are the losses that these people are complaining about at 
the present time. They have come in here under the excuse, or what¬ 
ever you might call it—under the guise of an amendment of a theft 
and pilferage situation, and they are asking what ? They are asking 
Congress to take off from the statute books something that relieves 
the shipowner from these enormous liabilities that are on the seas, 
that are incident to transportation by sea, so as to make him absolutely 
liable as an insurer. 

Mr. Amberg. No one we represent made such a suggestion. 

Mr. Lehlbach. Mr. Merriam made the suggestion, speaking for the 
Wrigley Chewing Gum people. 

Mr. Campbell. That is the effect of your suggestion. 

Mr. Burchmore. We all exempted errors of navigation. Mr. 
Campbell is correctly stating, however, I think, as the Chair under¬ 
stands it, Mr. Merriam’s position. 

Mr. Campbell. I can not take up now and analyze each proposal. 

I have got to take your extreme proposal. But even the proposal that 
you people make goes substantially to that effect—or at least that Mr. 
Rush embodied in the statements which he submitted here, which I 
suppose he submitted to his counsel before he proposed it. 

Mr. Laws. He did. 

Mr. Campbell. Now, the American shipowner is in a position where 
it is a life and death struggle with him. I do not need to dwell upon 


392 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


that. All I have got to do is to simply refer to the figures that were 
published in a yesterday morning’s paper showing, as the figures re¬ 
ported, a $200,000,000 loss last year in operating expenses on American 
Shipping Board vessels. Now, the American shipowner is in a posi¬ 
tion where he has got to keep the profits in the business in order to 
carry it on, and if you increase his operating expenses where is he 
going to get the money ? 

Mr. Lehlbach. $160,000,000 and no new construction under pres¬ 
ent circumstances. 

Mr. Campbell. Yes; I realize that. He is going to get it from one 
source, and that is from the American shipper. Now, what is the 
American shipper going to pay him for ? He is going to pay him a 
freight rate for the transportation of his goods, and he is going to 
pay him an additional rate to take care of this excess limit liability. 
Now, there is no two ways about it. If you repeal the Harter Act or if 
you amend it in the way that you propose, so that you make us liable 
for all these various losses, you are going to leave the American car¬ 
rier insuring what ? You are going to leave him insuring cargo losses 
caused by the act of God or the public enemies. 

But the proposal did not go so far as to wipe off from the statute 
books the limitation of liability act, so that the American shipper 
under your proposal would be left in a position where if the cargo 
ship happens to be a total loss at sea and the shipowner is free from 
blame he can plead his limited liability; the cargo on her will not be 
able to recover under that statute. Now, he has got to have protec¬ 
tion. The repeal of this act, or the radical modification of it, is not 
going to give the American shipper the protection he needs in his 
business; it is going to do but one thing: He already under the Harter 
Act has the steamship company liable for negligence in the custody 
and delivery of the cargo; the Harter Act alone exempts him from 
negligence in the navigation and management of the ship, providing 
the shipowner has exercised due diligence to make her in all respects 
seaworth}^. He is going to have risks, namely, against the total loss 
of his vessel, against the act of God and the public enemies, which he 
has got to insure. He pays the American shipowner an increased 
freight rate equivalent to the amount of insurance cost, and he has 
got to go to the American cargo underwriter to insure against loss by 
the public enemies and the act of God, and against the contingency 
of a total loss of his vessel under the limited liability act. 

Mr. Edmonds. And the American shipowner in some cases. 

Mr. Campbell. And the American shipowner in some cases. Now, 
the American exporter hasn’t got the money to carry on all the busi¬ 
ness himself. He goes to his bank and what does he do in the ordi¬ 
nary course of business? He obtains money from the bank on the 
security of an invoice against his buyer, of a bill of lading, and to-day 
do you suppose that there is a bank in Chicago that is going to ad¬ 
vance any great amount of money on the security of an insurance 
policy that insures only against the public enemy and the act of God 
and the total loss of the vessel, and the security of a bill of lading of 
some steamship company operating out of the port of New York, 
which is going to be liable for all of the great mass of causes that 
cause these losses? How many vessels are lost through the act of 
God or the public enemies? We are not at war, so you can wipe 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 393 

enemies out of it. How many vessels are lost through the act of God ? 
I should say that 999 out of every 1,000 cases of the result of negli¬ 
gence are carelessness in some particular in the navigation or man¬ 
agement of the vessels. So the insurance policy that the American 
underwriter is going to give him is of no value to him at all in his 
financing, and I do not believe there is a bank in America that, if 
they understand the condition, that would ever advance any money 
upon the security of a bill of lading. 

Now, all the ships that are plying the seas and all the ships that are 
going out of American ports are not owned by good, substantial 
American ship companies. We have seen that. We had the cases of 
two vessels told us of the Trans-Marine Co., where they had some 
$30,000 worth of shoes stolen from them. 

Mr. Lehlbach. Is the Trans-Marine Co. a substantial and respon¬ 
sible company? 

Mr. Campbell. Well, I do not know whether it is or not. I do 
not think it is. 

Mr. Lehlbaoh. Well, I know it is. 

Mr. Campbell. Then they were awfully rotten in their manage¬ 
ment, according to testimony produced here. Now, whether that is 
responsible or not, I do not know. But all the cargo is not going to 
come out of American ports in American ships. You are going to 
have Norwegian ships and individually-owned ships coming into 
American ports; you are going to have Italian ships, you are going 
to have Dutch ships, you are going to have English ships, you are 
going to have Swedish ships, and they are all going to carry cargo 
out of American ports. Is the banker in Chicago going to advance 
money on these exports on the strength of a bill of lading from 
the port of New York to some Norwegian steamer? Not if he is 
wise and he knows his business, and he will inquire into it. Why? 
Suppose you have a loss; supposing that your vessel is in collision 
and you have one of your compartments flooded and your cargo 
damaged going into a Central American port? Where is your se¬ 
curity? Your security is in your ship in a Central American port. 

The Norwegian owner may never send that ship back into an 
American port again where you can libel her. You may never see 
her again, and before you get a chance to libel her that ship may be 
sunk in a collision upon her next voyage, so she is wiped out. Do 
you suppose that the American bankers are going to loan money for 
exports upon any such security as that? Of course they are not. 
But if you put that system into effect the American ship owner, if 
he is going to survive, has got to have the increased rates to cover 
that risk, because, perchance, he may be liable; and if the bank will 
not accept that kind of security—and I have no doubt it would not— 
what have you got to do to finance exports? You have got to go to 
the American cargo underwriter and insure against those very same 
risks, and the result of this is going to be that unless you resort to 
the device of an insured bill of lading, the American shipper, 
through the wiping out of the radical amendment of the Harter 
Act, is going to find himself in a position where, if American ships 
are going to operate, he has got to pay an increased freight rate, 
and if he is going to finance his exports he has got to pay a premium 
to the insurance company for carrying the same risk. Now, who 


394 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

gets the benefit? Why, the insurance company. If it has a loss 
it will take a writ of subrogation against the American shipowner 
if all the defenses are wiped out to the American underwriter and 
he has the right of subrogation, and the only defense that the 
American shipowner has got is the act of God or the total loss of 
his vessel, and 999 cases out of 1,000 are not from the act of God 
but are due to negligence of one kind or another, it means that the 
cargo underwriter is going to have a subrogation in practically all 
cases against the American shipowner, and what is he going to be 
paid for them, then, for insuring? If you please, he is going to be 
paid simply for doing a banking business, namely, advancing a 
certain sum of money to the shipper until he can reimburse himself 
with the certainty of recovery under those cases from the American 
shipowner. That is all. 

Mr. Burchmore. It would reduce the premiums, would it not? 

Mr. Campbell. Will it reduce them? To a certain extent, but sup¬ 
pose it does, the moment you reduce the premiums, with the overhead 
you have got, the American underwriter is busted, as was revealed 
in the Berry investigation. Do you suppose that your reduction in 
premium is going to be commensurate with the increase in freight 
rates? If you think so, then you do not know the situation. 

Now, I could go on at length, but I am not going to do so. But 
what is the proposal? Why, we have heard lots about the insured 
bill of lading. What is the insured bill of lading ? 

Mr. Edmonds. Mr. Campbell, let me correct your statement one 
minute. I find on investigating that the overhead of English insur¬ 
ance companies is just as big as that of the American companies. 

Mr. Campbell. I am making no comparison. I mean all insur¬ 
ance companies because it is an expensive business to carry on. I say 
that in no sense of reflection at all, but it is an expensive business to 
carry on Now, what are you going to do with your insured bill of 
lading? If your bank is not going to be content—and you do not 
know it will be—and you come here and you are making a proposal 
for a radical change in legislation without knowing what your bank¬ 
ing interests are going to do or what attitude it is going to take, be¬ 
cause they have not been consulted in the situation, but the sugges¬ 
tion h.as been made that you are going to resort to an insured bill of 
lading. Now, I do not know, and I do not speak with any authority, 
but I told Dr. Huebner a while ago that I had no doubt but what the 
American shipowners, if they were requested by the American ship¬ 
pers to put into vogue and into effect a system of insured bill of 
lading they would probably do so. 

Now, if the American shipowner does it, the American shipowner’s 
competitor has got to do it, namely, the Britisher, the Norwegian, 
the Italian, the Swede and the Dutch. And here is where, in my 
judgment, the American underwriter commits suicide. What is the 
insured bill of lading? The insured bill of lading, as I have seen 
it in operation by the American-Hawaiian Line, consisted—it has 
been some years since 1 have seen it—consisted of a rubber stamp put 
on a bill of lading stating to the effect that this cargo was insured 
under open cover number so and so with the Insurance Company of 
North America, and so on and so forth, under terms and conditions of 
that company. Who is going to pay for it? The shipper is going 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 395 

to pay for it. Now, what does that mean? It means that the Ameri¬ 
can shipowners are going out and securing those open covers in the 
market where they can best buy the insurance. It may be that they 
will buy them in the American market, but if the testimony which 
has been produced in these insurance hearings is any indication at 
all, they are going to buy it where they have to sell what they have, 
namely, in the open world market. The shipowner sells transporta¬ 
tion in competition with the world, and he will buy his insurance 
in competition with the world, and he will buy it where he sells his 
goods and where he can buy it the cheapest. And the American ship¬ 
owners, with all of their fleet—and we have got a good fleet despite 
what we have said about it—the American fleet is not going to carry 
all of the exports in all the American ports. Look at the situation 
out of the Gulf to-day in the cotton trade. Are the American Ship¬ 
ping Board vessels carrying all of it? Look at the coal trade. Are 
American vessels carrying all of that trade? Look at any of your 
trades; the British ships are getting their share of it. 

Now, if the American shippers force the American shipowners 
into the insured bill of lading, competition is going to force every 
one of the British ships into exactly the same position, and if you do 
not force them to it you are getting the poorest security you could 
have in the world on your bill of lading, because your ship may never 
come back to port after she once puts to sea, and where is your se¬ 
curity ? You will chase it to the ends of the earth. But where is the 
Britisher? And going back to that, we have had lots of talk about 
the American merchant marine since the war. There has not been 
one chairman of the Shipping Board who has gone further than 
saying that America ought to have the right to carry 60 per cent 
of her commerce. We all believe that and we all want to see it, but 
we haven’t got the nerve to say it—yet—that America has the right 
to say 60 per cent—we say 50 per cent. Who is going to carry the 
other 50 per cent? The British, the Swedish, the Norwegians, the 
Dutch, the Italians, the Spanish. Now, do you suppose for one mo¬ 
ment that the British shipowner is going to take out this open cover 
to provide an insured bill of lading insurance? Do you suppose he 
is going to take that out in the Insurance Company of North Amer¬ 
ica, the Firemen’s Fund, the Federal, or any American company? 
No, sir; he is going to go to his English market; he is going to be just 
as patriotic to the English flag as we are patriotic to the American 
flag. He is going to insure that insurance there if he can get it 
cheaper—and Ave knoAv he is getting it cheaper. 

The insured bill of lading means—if it is put into effect at all—it 
means universal operation, I should say, in American foreign trade, 
and that means that 50 per cent of American cargo insurance is go¬ 
ing to go abroad. Is that in the interest of your clients? No, sir. 
Is it in the interest of American business? No, sir. You have held 
hearings here, Mr. Edmonds, on several occasions, trying and striv¬ 
ing to devise means to keep this business in America, and you were 
told in those hearings, and we were told, that 90 per cent of the 
American cargo business to-day is done in America, Avith American 
underwriters; that the business which is going abroad to-day from 
America is the hull insurance, because it is unprofitable to American 
underwriters at the rate at Avhich the British Avill take it. 


396 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Why, gentlemen of the committee, the proposal of the insured bill 
of lading—and it is the only scheme that will give the American 
shipper any adequate protection—that proposal means driving out of 
American markets 50 per cent of the cargo insurance that you have 
got in here to-day, namely, 45 per cent of the total amount of your 
insurance, if we can believe those figures. 

Now, I submit that any proposal for an amendment of the Harter 
Act, that proposes to bring about that condition, is vicious legisla¬ 
tion, and I do not believe it will pass any Congress, and I do not 
believe any committeemen or any member of the committee will rec¬ 
ommend legislation of that kind, once he sits down in his chamber 
and calmly thinks over what the situation is and has an opportunity 
of analyzing it, away from the disturbing influences of a lot of 
lawyers. 

Now, that is all I am going to say at this late hour on that subject. 

There is one other subject that I do want to turn my attention to, 
and that is this: We have had reference once in a while to the 
Britisher. It has been clearly stated to you, and without contradic¬ 
tion, excepting the suggestion that came from Mr. Englar, which 
was not contradiction, that under English law the shipowner has 
great freedom of contract and can contract against his negligence. 
In other words, the British shipowner under British law can by con¬ 
tract obtain greater exemptions from liability than the American 
shipowner can under American law. I do not belieA^e there is any 
question about that. I think Mr. Hickox said he thought the de¬ 
cisions of the British courts lean more strongly in favor of the 
shipper over there than the shipowner. 

Now, then, we have also been told that the thefts on English ships 
and in English trades are not as great as they are in American 
trades. We know Great Britain has built up a great world trade in 
shipping and exports under the laws she has had, and this subject 
of thefts and pilferages has not only engaged the attention of this 
committee, but it has engaged the attention of the English people 
and they went at it seriously enough so that they had a committee 
appointed by the premiers of all the British Dominions and that 
committee was composed of very distinguished men—some of them 
shipowners. In their recommendations which they have made, do 
they condemn the Harter Act; do they say that they are going to 
deny to the British shipowner any of the exemptions from liability 
of the Harter Act? Why, no. They say that the Harter Act is 
almost perfect legislation, and they point to the fact that the 
Canadian Parliament, in its water carriage act, has adopted sub¬ 
stantially the Harter Act and that the Australian Parliament has 
done the same thing. 

Now, what is the proposal here? Why, we are going to go the 
British one better. The proposal before your committee is in effect 
that now that the British shipowner has advanced to the step where 
he is going to say, “ We are going to put on our statute books the 
Harter Act, which has proved such highly desirable legislation,” the 
American shipowner, in this awful condition and American ship¬ 
ping is going to be forced into a position where he is going to have 
taken from him the exemptions from liability that the English 
people say “We are going to give by statute to the British ship¬ 
owner.” 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 397 

Mr. EdmondS. Is not that almost perfect legislation in the Harter 
Act, that very thing, that they think it is almost perfect because it 
has not that stoppage of limitation of liability? 

Mr. Campbell. No ; because the very act they approve has in it 
what the Harter Act has, a $100 limitation. Now, the question of 
whether you are going to put in a limitation of a $100 valuation, or 
$250 valuation, or $1,000 valuation, is simply a question of freight 
rates. You have had to start on a rate-making basis, as Mr. Ryan 
pointed out to you, with a base rate. If you have a man shipping 
cotton, wheat, or flour in packages at a value less than $100—and 
that is about 80 per cent of the shipments, I believe—do you believe 
that man is going to pay on a valuation of $250 a package, or $500 
a package, or $1,000 a package? No. You have to start in that 
business with a base rate, and your base rate here is on the value of 
$100 and every shipowner who has been in here has told you the 
American shipper can obtain a release under that clause in the bill 
of lading by simply declaring the increased value and paying an in¬ 
creased rate. But the proposal is to go the British one better and to 
do the American shipowner by taking away from him the exemptions 
from liability that England, in all of her dominions, now proposes 
to put upon her statute book and to grant it to them by statute in¬ 
stead of leaving it as a matter of common law or a matter of mari¬ 
time law. 

If I had the time I could go on for an hour on the various 
phases of this matter, but it has already been covered, and the hour 
is late, and that is all I am going to have to say at this time. 

Mr. Lehlbach. Does that complete your presentation? 

Mr. Campbell. Yes; excepting one thing, Mr. Chairman, and you 
were not here at the time. We have simply scratched the surface, 
so far as theft and pilferage is concerned. If you want to go into 
the question of the Harter Act, announce to the commercial industry 
of America and the shipowners that you are going to take up the 
question of amendment of the Harter Act and then you will have a 
discussion of it; but do not send out word you are going to take up 
a discussion of theft and-pilferage and bring us down here and 
confront us with such vicious legislation as proposed here and quit 
there. If you want to go into the subject of theft and pilferage, if 
you want to go to the bottom of it, bring your committee up to New 
York, bring your committee up to Boston and to Philadelphia and 
let us go to the bottom of this whole thing. If you want to go into 
the question of an amendment of the Harter Act, then call a meet¬ 
ing here—but do not call it in the middle of July or August—and 
we will go into that subject. 

Mr. Laws. I do not want to detain this committee now. It is 
pretty late and it takes a lot of nerve to listen to an argument now. 

Mr. Lehlbach. You were not going to bring out any new matter ?, 

Mr. Laws. I would like to answer two or three of the proposi¬ 
tions, particularly that Mr. Hickox referred to, because I think it 
is so fresh in your minds it might disabuse them on several things 
which I think are incorrect. 

Mr. Lehlbach. Can you do that in the space of 5 or 10 minutes? 

Mr. Laws. Yes; in 10 minutes. 

Mr. Lehlbach. As they say over in the House, you will be recog¬ 
nized for 10 minutes. 


398 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


STATEMENT OF MR. F. S. LAWS, PHILADELPHIA, PA., OF THE 
FIRM OF LEWIS, ADLER & LAWS. 

Mr. Laws. In the first place, Mr. Hickox has given us the im¬ 
pression that it has been held under the Harter Act that a limita¬ 
tion of $100 has been good for many years, and that there has never 
been an amendment to that Harter Act, notwithstanding that knowl¬ 
edge; and that when Senator Nelson’s bill attempted to correct it, 
that was fully known. 

Now, the law is printed in ink and bound in buckram and any¬ 
body can find what it is; and I say to you that until 1919 there 
never was an affirmative decision that under the Harter Act a limi¬ 
tation of liability to $100 was possible. The first intimation, or the 
first time that subject was discussed as applicable to the Harter Act, 
was in this case in 1918, in the Calderon case. In that case there 
was a provision in the bill of lading that the shipowner should not 
be liable for a loss of anything over $100, and the Supreme Court 
of the United States, in one hundred and seventy United States, said 
that that was invalid because it was an attempt to deny liability in 
any case unless it was under $100, and the shipowner *was liable. 

Later on, in the latter part of 1918, a case arose of the Frederick 
Leyland Line in New York, in which the district court held that 
under the Harter Act you could not limit the liability to $100; that 
it was contrary to the intention of the act. That case was taken to 
the circuit court of appeals and there, for the first time, in 1919, it 
was decided that in view of the intimation made in the case of 
Calderon, in one hundred and seventy United States, the court felt 
constrained to say that under the Harter Act you could limit your 
liability to $100. And that is the first case of which I have any 
knowledge, and I think it is the first case, and I want to hear of it if 
there is any other case in which the courts have said affirmatively and 
decided that point as a point—that there could be a limitation of 
liability to $100 under the Harter Act. 

Now, they cited the case of Hart v. Railroad Co. It Avas decided 
back in 1884. That Avas not a case arising under the Haider Act; 
it was a suit against the Pennsylvania Railroad for the loss of some 
horses, where the owner went to the railroad and made a special con¬ 
tract and Avent along Avith the horses, and the Supreme Court said 
that contract was good; and to correct that case and others like it, 
the Cummins amendment to the interstate commerce act Avas passed, 
and the Harter Act never figured in it in any Avay, shape, or form. 

This question is bigger than the lines represented by these gen¬ 
tlemen, because there are hundreds of vessels that do not go from 
their Avharves, there are any number of lines that do not go out of 
their port, and there are hundreds of vessels and tramp steamers that 
do not sail from the port of New York. If they take care of their 
losses, they need not worry about any amendment to the Harter Act; 
but there are other steamers and "transportation lines, ocean and 
coastwise, tramp and other vessels, that Ave have to deal with in 
these theft cases. So they need not fear if their losses are reduced 
to the minimum; it is none of their concern and they need not fear 
an amendment to the Harter Act making the steamship owner liable 
for negligence and wiping out the limitation of $100 in case they are 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 399 

liable through their negligence. It is only the bad ship owner who 
need fear. It is only the man who commits crimes who fears a 
criminal law. It makes no difference to the innocent man how many 
laws there are; it is only the man who wants to do wrong who fears 
them; and if they do not intend to do wrong and if they are pro¬ 
tecting themselves against theft and pilferage, they need fear noth¬ 
ing in the way of an amendment to the Harter Act. 

Also, the testimony has demonstrated, beyond peradventure, that 
when they take proper care and caution, the theft and pilferage 
losses amount to nothing. But they have only given you the story 
as it applies in New York. We have other ports along this seaboard, 
to which ships are going every day—not their ships, but other peo¬ 
ple’s ships; not their wharves, but other people’s wharves—where 
there is no care taken of the merchandise, where there are no pre¬ 
cautions of any adequate nature against theft and pilferage, and 
against which we have no remedy whatever unless there is some 
amendment by which, if we prove their negligence, they are com¬ 
pelled to pay. So that it is broader than their cases; it applies to all 
cases, all vessels, coastwise, ocean barges, and everything else that 
are subject to the terms of the Harter Act. 

We do not want the Harter Act wiped out. We want a provision 
in the Harter Act merely that if it is demonstrated that they are 
liable, that it is a case in which they are guilty of negligence, and 
we prove it in a court of justice, that they should be compelled to 
pay the full amount of their liability and the full amount of the 
value of the thing. 

I thank you. 

Mr. Campbell. That is just the whole trouble with the suggestion 
you make—the remedy hits the good man because of the acts of the 
bad man. 

Mr. Laws. The good man need not fear. 

Mr. Campbell. But you are seeking to get a remedy for the acts of 
a few of the bad men by placing an undue hardship upon the good 
men, who are in the majority. 

Mr. Laws. But if the good man won’t be hurt, and I have no ques¬ 
tion you will be, then you have nothing to fear. 

Mr. Lehlbach. I understand Mr. Goulder, of the Great Lakes, 
desires to be heard for a few minutes. 

STATEMENT OF MR. HARVEY D. GOULDER, CLEVELAND, OHIO, 
REPRESENTING THE LAKE CARRIERS’ ASSOCIATION. 

Mr. Goulder. There is only this: I have not attended the meet¬ 
ings, because I understood it was theft and pilferage. We have 
nothing of that sort on the Lakes. But I heard to-day there was 
something about the Harter Act which was involved. I find that the 
whole subject is foreign to the Lakes. 

I noticed in the pamphlet of the hearing on the Nelson bill that 
the Crosby Co., the Washburn-Crosby Co., in sending on the form 
of an amendment to the bill to Senator Nelson in June, 1912, say: 

You do not have much difficulty in making proper adjustment for losses of 
the inland lake carriers. 

And in their brief that was submitted with the amendment they 
say the same thing—that there is no trouble on the Lakes with the 


400 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

Harter Act, and that bill was framed so that the Lakes were ex¬ 
cluded, excepting there was a little question of our intercommerce 
with Canada, which we are permitted under our license to do as an 
enrolled ship, and Senator Nelson was to have that fixed. It was 
not to apply to the Lakes. 

Now, I find the situation is the same here. As I say, I have not 
been in attendance on these hearings. It just happened Mr. Ed¬ 
monds knew I was in the room, and I only want to say that I have 
not taken part and do not expect to take any part, because the Lakes 
evidently are not intended to be covered, and in anything that may 
be prepared in the way of a bill that should be religiously cared for 
to see that we are not drawn into something with which we have 
nothing to do and that can not possibly apply to us. 

I have here a telegram which I would like to file for the record. 

(The telegram is as follows:) 

Chicago, III., July 19, 1921. 

Hon. William S. Greene, 

House Office Building, Washington, D. C.: 

Repeal or amending Harter Act or limited liability acts on Great Lakes would 
be disastrous to Great Lakes marine interests. Pilfering not of sufficient 
amount to call for this action. 

H. W. Thorp. 

Mr. Laws. The shippers and underwriters appreciate the courtesy 
received at the hands of the committee at this hearing. 

Mr. Lehlbach. The hearings of this committee on this subject now 
adjourn sine die. 

(The hearings were thereupon closed.) 


(The following communications were ordered printed in the rec¬ 
ord:) 

Cincinnati, Ohio, July 19, 1921. 
Chairman Committee on Merchant Marine and Fisheries, 

Washington, D. C.: 

The Cincinnati Chamber of Commerce has officially approved the amendments 
to the Harter Act, which will restore common carriers liability to make good 
losses caused by their own tort or negligence, and prohibit their escaping this 
liability by means of bill of lading clauses, which limit their responsibility to 
less than the value of the merchandise transported, and hope your committee 
will recommend restoring the common-law liability by ocean carriers. 

Cincinnati Chamber of Commerce, 
Malcolm Stewart, 

Manager, Foreign Trade Department. 


The Rubber Association of America (Inc.), 

New York, July 22, 1921. 

Hon. Frederick R. Lehlbach, 

Chairman, Subcommittee on Marine Insurance, 

House of Representatives, Washington, D. C. 
Dear Sir: Our attention has been directed to hearings that have been held 
by your committee in connection with investigation of the causes of heavy 
losses of American export cargoes through theft, pilferage, breakage, or other 
damage, or nondelivery, also proposed amendments to the Harter Act. 

We regret that the traffic committee of this association was unable to be 
represented at these hearings, but this subject, as well as the proposed amend¬ 
ments to the Harter Act, has had the attention of our committee. 







THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 401 


It is our understanding that tlie proposed amendments to the act are de¬ 
signed to prohibit the settlement of claims for losses on basis of any sum 
less than the full actual amount of such loss or damage, whether the mer¬ 
chandise has been shipped at a reduced rate of freight or not, or at an agreed 
value which is less than its actual value, also that the burden of proving 
freedom from negligence in event of loss or damage shall be upon the vessel 
and her owner. 

We believe that the necessity for adequate protection to exporters for losses 
other than ordinary marine risks, have been fully stated to your committee, 
and it is therefore unnecessary to present our views in detail, but desire to 
record the views of our traffic committee as being heartily in accord with the 
proposed amendment to the Harter Act, as well as to urge upon your committee 
that it take action along constructive lines to adequately safeguard interests 
of American exporters from losses such as are the subject of investigation of 
your committee. 

Very truly, yours, 


R. H. Goebel, General Manager. 


Southern Lumber Exporters’ Association, 

New Orleans, La., July 20. 1921. 

Hon. Frederick R. Lehlbach, 

Chraiman Subcommittee on Marine Insurance, 

Committee on the Merchant Marine and Fisheries, 

House of Representatives. 

Dear Sir : Referring to your letter of July 15, and your previous letter in¬ 
viting the writer to appear before your subcommittee relative to marine losses 
and bill of lading provisions, permit me to submit the following observations: 

This association is not so much concerned about losses resulting from pilferage, 
since lumber is not easily pilfered in quantity, as it is in the practice of the ocean 
carriers, and the Shipping Board seems to have lead in it, of putting in their 
bills of lading provisions exempting them from nearly every sort of liability for 
either carrying the freight safely or delivering it promptly or to its proper desti¬ 
nation. These exceptions seem to me to violate the principles of fair dealing, and 
I think some of them are in direct contravention of the Harter Act. They have 
lead to a spirit of irresponsibility on the part of employees, great and small, of 
which pilferage is one of the minor results, or symptoms. If everybody is 
exempted from all responsibility, except to take the freight money, carefulness 
and service vanish. What is needed is to bring the American carriers, particu¬ 
larly the Shipping Board operators, to realize that they are paid for service, 
and must render it, and accept responsibility for the safety of the goods and their 
prompt and proper delivery; that their bill of lading should be short, concise, 
and not entirely onesided, and that the endeavor to escape responsibility for per¬ 
forming properly the service which one follows as a business and is paid to 
perform, is not a recommendation for the employment of such a one. 

I quote below some clauses from the bill of lading of A. H. Bull & Co., Shipping 
Board operators, for your information; other operators’ bills of lading contain 
essentially the same provisions, maybe milder, maybe more severe: 

“ The vessel shall have liberty hereunder, either before or after proceeding 
to or toward any port of discharge or transshipment, to proceed to or toward, 
call, enter, or stay at or off any pprt or ports, although not on the usual or 
any route to, and although in a contrary direction to or beyond the port of dis¬ 
charge or transshipment, once or oftener, backward or forward, in any rota¬ 
tion, for any purposes whatsoever, though pertaining to another voyage, and 
the same shall not be deemed a deviation, but deemed within the voyage 
hreby intended as fuly as if specificay described herein. 

“ The carrier shall not be responsible for delay, loss, damage, or default be¬ 
fore, during, or after loading, transportation, or discharge, occasioned by any 
of the following excepted clauses: The act of God, perils of the seas or canals 
or other waters or of navigation or maneuvering of whatsoever nature or kind, 
lire or exposion wheresoever occurring, pestilence, quarantine, rain, spray, 
floods, freshets, ice, frost, fogs, or any causes beyond the carrier’s reasonable 
control; by enemies, pirates, robbers, thieves, arrest or restraint of princes, 
rulers, governments, or peoples, by legal process or stoppage, war, riots, rebel¬ 
lions, mutinies, strikes or stoppage of labor, labor troubles on the vessel or 


60683—21-26 




402 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


other craft or on shore, and whether with the carrier’s employees or others, 
risk of craft, wharf, warehouse, hulk, cranes, or transshipment, barratry of 
the master or crew; by heating, shrinkage, drainage, effects of climates, fer¬ 
ment, decay, deterioration, putrefaction, wasting, sifting, rust, sweat of any 
kind or origin, change of character, drainage, leakage, breakage, loss of con¬ 
tents or weight, absence or obliteration of marks or numbers or address, er¬ 
rors of description, insufficiency of packages or wrapping, condition of pack¬ 
ages or wrapping or injury to or soiling of the same, cooperage, mending, loss 
or damage arising from the nature of the goods, land damage, nor by any act 
or omission of the shipper or owner of the goods or his agent or representative, 
by stranding, grounding, collision, straining of the vessel, heat of holds, ver¬ 
min, rats, sea water, wetting, fumigation of the ship, drainage, steam, brine, 
condensation, stowage or contact with or smell, evaporation of taint from 
other goods, the vessels being privileged to carry any other goods, whether 
hazardous or not, and also to carry live stock on or under deck, bursting of 
boilers, breakage of shafts, accidents to or from machinery or breakage 
tlieeof, any latent defect in hull, machinery, refrigerating machinery, appur¬ 
tenances, or gear, or unseaworthiness of any kind, whether existing at the 
time of shipment or at the beginning of the voyage, faults, errors, or omis¬ 
sions in the navigation or management of the vessel, whether by the carrier’s 
employees or pilots or others, provided that due diligence shall have been ex¬ 
ercised to make the vessel or any craft seaworthy and properly manned, 
equipped, and supplied. 

“ The goods, whether perishable or not, are accepted by the carrier subject 
to delays or default in shipment, transportation, delivery, or otherwise, occa¬ 
sioned by shortage of conveyances or room, lack of facilities of any sort, ac¬ 
cumulation of cargo, weather, or any conditions not shown due to the carrier’s 
fault, and notice to shipper or others of any danger of such delay or default 
is hereby waived, and the carrier shall not be responsible for any such delay 
or default, and if loading of the goods in customary manner is delayed, or the 
vessel is likely to be detained she may proceed forthwith without loading or 
completing the loading of the goods. 

•“ The vessel may commence discharging upon arrival immediately she is 
ready, without notice, at any hour of day or night, and discharge with or 
without intermission at wharf, in stream, or elsewhere, at carrier’s convenience, 
any custom of the port to the contrary notwithstanding, and the collector of 
the port is hereby authorized to grant an order for the discharge of the cargo 
immediately after entry of the vessel. Whether the vessel be discharged at 
wharf or in stream or elsewhere, the goods may, without notice, be in whole or 
part discharged over side into lighters or other craft at risk and expense of 
shipper, consignee and /or assigns from the time the goods leave the vessel’s 
tackles, the carrier being hereby authorized to employ or appoint lightermen, 
contractors and/or others, without responsibility of the company for the 
character or condition of any craft, for account of shipper, consignee and/or 
assigns, notwithstanding the latter are at hand with their own craft. 

“ If, by any reason of quarantine, blockade, war, hostilities, conditions of 
surf 01 weather, lack of water, Sundays or holidays, port regulations, shortage 
of lighters, riots, or of strikes, lockouts, stoppage or shortage of labor, of the 
canier s employees 01 others, or by reason of any of the excepted causes men¬ 
tioned elsewhere in this bill of lading, or other conditions, existing or threatened 
at the port of transshipment or discharge of the goods or elsewhere, the vessel 
is. 01 in the master s opinion is likely to be, prevented or delayed from reaching 
or from entering, or from making due delivery of the goods at the port of 
transshipment or discharge, or delayed at said port or in dischraging there be¬ 
yond the usual time, then either with or without proceeding to or toward or 
entering or attempting to enter said port, the goods may be retained on board 
and discharged on return trip or subsequent voyage, subject to all liberties of 
this bill of lading, or be discharged as convenient for the vessel at anv other 
port to which the vessel is bound or may proceed, at the risk and expense of 
shipper, consignee and/or assigns all responsibilities of the carrier being ended 
upon such discharge and full freight together with extra compensation for ad- 
nnt 10 *^ 1 tiansp J ltatl01 J being payable, and at carrier’s option the goods may be 
carried on or forwarded to destination from any other port at which so dis¬ 
charged at nsk and expense of shipper, consignee and/or assigns, subject in 
an / cas e hereunder to the provisions in other respects of this bill of lading if 
t ansportation is performed by the carrier or to the usual bill of lading of anv 
other carrier performing the same.” s OI an ^ 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 403 


Each of the various operators has his own bill of lading, and I think no two 
of them are alike. They are changed from time to time. They generally cover 
a long page of finely printed matter. If the Shipping Board would prescribe a 
standard bill of lading for all its operators’ use, a different one for each of the 
principal trades; cotton, grain, coal, lumber, etc., and eliminate the excess ver¬ 
biage and unreasonable and untenable provisions, it would be a great source 
of relief for shippers and do more to popularize the use of Shipping Board 
vessels than any action that can be taken. 

I trust you may find something of value in these suggestions. Appreciating 
the privilege of being permitted to submit them to your committee, I am 
Very truly, yours, 


C. E. Dobson, 

Managing D irector. 


Guaranty Trust Co. of New York, 

New York, July 20, 1921. 

The Chairman Subcommittee on the Merchant 

Marine and Fisheries, 

Wasshington, D. C. 

Dear Sir : In reference to your hearings for the purpose of discovering what 
legislation, if any, may be necessary to check the continuation of pilferage on 
board freight steamers carrying American products, yoit may be interested in an 
experience I had in Buenos Aires, Argentina, in January last. 

I made a tour of South America for the Guaranty Trust Co. to study prevail¬ 
ing trade and financial conditions, and while in Buenos Aires I met at luncheon 
with certain American importers—managers of branch houses of American 
firms, as well as heads of Argentine firms and corporations — a number of whom 
were members of the American Chamber of Commerce there. These gentlemen 
related some of their recent experiences in the matter of loss of freight from tbe 
American ships carrying cargoes from American ports, and they were going so 
far as to seek pledges from their fellow importers not to use another American 
ship, especially a Shipping Board vessel, until the evils had been remedied. 

One gentleman, the manager of the Buenos Aires branch of a well-known 
American house, said: “ Do you realize that we have been losing no less than 
60 per cent of several of our shipments by these robberies on board? And in 
cases we have carefully followed up we find the job of pilfering so deliberately 
done that the evidence all points to tbe stealing having been carefully planned 
and executed over a period of several days on board the vessel. Moreover, such 
robbery, entailing the opening of heavily bound cases, extraction of goods, the 
nailing up and readjustment of all fastenings, packings, etc., could never have 
been carried on if proper vigilance had been exercised by the authorities on 
board. Armour & Co. have shipped cases of perfumes, soaps, and other toilet 
articles down here, and lost anywhere from 30 to 60 per cent of the contents 
of several cases. And you can get no satisfaction because of these new non¬ 
responsibility clauses in the bills of lading and because things have now gotten 
so bad that the marine insurance companies will no longer insure against theft 
on board our American ships.” 

“ Why do you single out the Shipping Board boats as being the worst; that is, 
the most risky? ” I asked. # 

“ Because.” replied the American, “ the operators are frequently inexperienced 
or they have so little capital that they have to keep down expenses to the mini¬ 
mum and will not employ watchmen over the holds. Our regular American lines 
that send boats on this route have been almost as bad lately.” 

“ How does that happen? Do the English lines not suffer the same trouble? ” 

“No; they are more experienced and they select their crews more carefully. 
They are better organized and they have more discipline on board. They do not 
attempt to avoid responsibility if we can show that the pilfering took place en 
voyage. Much of the stealing is done while in port here, and the English lines 
take precautions against that. Then, too, there has prevailed a good deal of anti- 
American sentiment here for some time past and the stevedores and port workers, 
being not a very intelligent class of men, seem to regard the American vessels 
as legitimate prey, assuming, also, that they have the richest cargoes.” 

“ I have noticed that considerable lightering has to be done in this port. Is 
it not possible that a great deal of your trouble takes place during the transfer 
of cargoes? ” 



404 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


“ Yes,” replied the importer, “ we know it does. We have been working on 
this matter for several months' and we have traced down a number ol these 
thefts so that we know quite a number of the cases of merchandise were broached 
between New York and Buenos Aires. As to the thefts in port, we know all 
about them, and they have been prolific, but we are helpless. We have been to 
see the chief of police, without avail. His detective bureau were familiar with 
all details and said if they had authority they could stop these organized, whole¬ 
sale robberies in two weeks, but the ‘ men higher up ’ would not give the word. 
He said it was up to the port authorities, who were Federal officials. So we 
went to the master of the port, a Federal official, and the interview was most 
interesting. He said : ‘ Well, if you take their perquisites away from these poor 
stevedores and port workers, they will strike. Can not the rich American cor¬ 
porations stand to lose much better than these workmen? ’ What are you going 
to do with such an argument as that? 

“ We have complained to our diplomatic authorities here, but we have not 
had much satisfaction, although we understand proper representations have 
been made in Washington. The labor boycott is complete in Buenos Aires; in 
fact, almost throughout the Argentine. The unions have taken advantage of 
public sentiment—agitated by foreign propaganda and aided by the mistakes 
of American exporters, plus the high price of the dollar, falling commodity 
prices, congested merchandise and the like—and have not been afraid to make 
American employment interests the principal victims of their radical demands.” 

I was able to confirm this testimony .as to the remarkable efficiency of the 
labor boycott in Buenos Aires. I talked with a prominent American packer 
who had recently discharged his personal chauffeur for negligence and insub¬ 
ordination. Three days after the man had been discharged the head of the 
stevedore’s union called upon the packer and said: “ If you don’t take this 
chauffeur back into your employ your company will not be permitted to ship a 
hide out of the Argentine.” And he had to obey or risk a violation of company 
contracts. 

The West India Oil Co. (a subsidiary of Standard Oil) had a strike of plant 
workers at Campinas, a few hundred miles up the line from Buenos Aires, 
during last January. 

“ Out of sympathy ” with these workers all the taxi and private car chauffeurs 
in Buenos Aires went on strike. Car owners who drove their own machines 
were not even permitted to> procure gasolene at the West India Oil Co.’s sta¬ 
tions. When they did, their cars were stopped by the strikers and deprived of 
such part of the gasolene supply as the strikers chose to take. Garages housing 
private cars whose owners sought gas surreptitiously from West India depots 
were boycotted and the garage owners finally would not admit cars whose 
proprietors would not lay them up in recognition of the strike. The strikers 
finally were joined by the port workers at La Plata, as well as Buenos Aires, 
and the tie-up was complete. They openly claimed the sympathy of the 
Argentine Government and defied both the public and the employers in all 
affiliated lines. 

Before I left Buenos Aires a number of local steamship operators were en¬ 
deavoring to procure pledges of all the shipping interests to agree to boycott 
the entire port of Buenos Aires for a period of three months, as the only ap¬ 
parent step by which public and government recognition of their rights might 
be attained. They later reported their inability to procure the cooperation of 
the United States .Shipping Board in this respect. 

Very truly, yours, 


Allen Walker. 


Boston Wool Trade Association, 

Boston, Mass., July lJ h 1921. 

Chairman Merchant Marine Committee, 

House Office Building , Washington, D. C. 

Dear Sir: We understand that your committee has assigned for hearing on 
July 19 on proposed amendments of the Cummings and Harter Acts which 
provides that the carrier will be responsible for the full value of merchandise 
loss or damage, provided such loss or damage is due to said carrier’s negligence. 

We are heartily in support of the above, as many times in the past few years 
the carriers have fallen behind in this bill-of-lading provision and refused to 
pay claims. Take, for instance, the Harter Act. Ordinarily a bale of wool 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 405 


weighing more than 1,000 pounds is worth more than $100 per bale. We have 
found it the practice for some one to steal those bales and when we place our 
claim we can only collect $100. Any dishonest employee of a shipping con¬ 
cern can make money in stealing merchandise, and we hope that you will allow 
this letter to go into your records to support the above measure. 

Very truly, yours, 

H. A. Davis, Manager. 


National Association of Waste Material Dealers (Inc.), 


New York, July 18, 1921. 

Hon. William S. Greene, 

Chairman Committee on Merchant Marine and Fisheries, 

House' of Representatives, Washington, D. C. 


Dear Sir: In accordance with suggestion as contained in your telegram of 
July 14 that your committee would -welcome suggestions in reference to loss, 
damage, or pilferage, etc., on import shipments as well as export shipments, I 
am bringing to your attention some of the difficulties that members of this 
association have in connection with such losses. 

If you will pardon me, I should like to state, first, that for something over 
20 years I was actively connected with the Commercial Bulletin, of Boston, 
published by Curtis Gild & Co., and had an opportunity to become quite familiar 
with practically all the problems which have troubled importers in connection 
with the matter referred to, and in connection with my work as secretary of 
this organization during the past eight years, I have had plenty of opportunity 
to keep in touch with conditions as they have affected members engaged in the 
waste-material industry and I can say frankly to you and the other members 
of your committee that none of the difficulties which are encountered in doing 
business with foreign countries, particularly making purchases, compare with 
the difficulties brought about by the arbitrary and oftentimes high-handed 
methods or interpretations placed on the various laws made to cover such 
matters by the steamship companies, particularly foreign lines. 

A committee made up of very able men engaged in this industry has had 
this matter up with the steamship companies for the past year or two and we 
have tried in every way to work out some solution of the problem, but with 
few exceptions we have found the steamship companies taking an arbitrary 
position and not showing any disposition to meet the situation in a broad¬ 
minded way with a view of remedying conditions as they exist at the present 
time. 

I do not desire to burden you with a long letter. I learned while with the 
late Curtis Guild of the thoroughness with which you took up matters of this 
character or any matters of real importance, and I am quite sure that you and 
your committee will do your utmost, while being fair to the steamship owner, 
the insurance underwriter, to at the same time see that the innocent consignee 
is protected. 

Our people are obliged to open letters of credit for every dollar’s worth of 
material they import, and the steamship companies seem to feel that they can 
deliver the goods or not as they please, or in any shape they please. 

I inclose herewith copies of letters which have been sent out either by 
myself or the president of this association covering this matter and I also 
inclose a photograph showing the way a certain shipment of rags was landed 
on one of the piers here in New York. When a shipment arrives in this con¬ 
dition the steamship companies say to our members: “ We do not know how 
much of this is yours, but as your bill of lading calls for so many bales, we will 
bale up that much and turn it over to you regardless of whether it is your 
material or someone’s else and charge you for rebaling.” That charge some¬ 
times runs up as high as $3 per bale. 

A study of the situation from every angle has led us to classify the situation 
as follows: 

First. The contracts and conditions of the bill of lading are agreed upon be¬ 
tween the carriers and shippers in Europe. 

Second. The Shipping Board has no control over the situation except as to 
its own ships. 

Third. There is no public authority having jurisdiction in the matter of 
terms and conditions contained in ocean bills of lading of ships of foreign 


registry. 



406 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Fourth. The Harter Act states the law, hut where the act is violated it is 
necessary for the shipper to proceed by civil action for the enforcement of the 
law. 

Fifth. Congress could enact necessary legislation, but has not done so. 

In connection with point 4 above, I would particularly call your attention to 
the fact that the experience of our members has been that even after they have 
gone into court and successfully prosecuted a claim, the steamship companies 
immediately formulate another clause which will take care of the situation 
and absolve them in the future. You will note that our president, Frank C. 
Overton, has emphasized this point in his letter to Senator McKellar. 

In conclusion I would like to ask whether or not it is possible for this asso¬ 
ciation to secure a copy of the record covering the hearings that are being 
Reid on this matter before your committee? If so, same would be very much 
appreciated. 

Respectfully, yours, 


Chas. M. Haskins, Secretary. 


National Association of Waste Material F>ealers, 

June 15, 1921. 

Hon. Kenneth D. McKellar, 

TJivited States Senate , Washington, D. C. 

Dear Sir: Mr. H. F. Masman, traffic manager of our associaton, has for¬ 
warded to me copy of the bill you introduced in the Senate, S. 327, relating 
to navigation of vessels, bills of lading, etc. 

I desire to express my appreciation of your efforts to safeguard shippers 
and consignees of merchandise carried by steamers plying between the United 
States and foreign ports, and to provide that the steamship lines be required 
to assume reasonable and legitimate responsibility for goods while in their 
care. I feel that if this bill is passed it will do much toward creating a more 
reasonable attitude on the part of the steamship lines. 

I venture to hope that some day we will progress to a point where we will 
have a standard bill of lading worded in accordance with the law and free 
from individual and arbitrary clauses designed to relieve the steamship com¬ 
panies of any contingent liabilities. In ths connecton I would like to ask 
whether, if the bill introduced becomes a law T , you feel it would take care of 
such a contingency as the following: 

A hill of lading is issued for goods received in apparent good order, the 
number of packages mentioned and the marks and numbers. The steamship 
company then either writes, stamps, or has printed on their bill of lading a 
clause in effect as follows: 

“ Steamer not responsible for marks nor for numbers of bales and broken 
bales or short weight on account of spilling or breaking of bands during the 
transfer. Repacking, extra wharfage at the ports or discharge, if any, for 
account of the owners of the goods.” 

The foregoing is an exact copy of a clause taken from one bill of lading, 
and clauses of similar purpose are frequently stamped on bills of lading. The 
steamship lines under such clauses claim that they are absolved from the ne¬ 
cessity of delivering us goods marked in accordance with the marks on the hill 
of lading, and endeavor to force us to accept bales which do not belong to us, 
which may have a different mark or no mark at all, as they claim that under 
the clause in their bill of lading they are not responsible for marks. 

My firm has a controversy at present with the Lloyd Royal Beige, which 
will probably come to a lawsuit on this very issue, and the attorney for the 
steamship line advises us that should we win the suit they will simply go 
ahead and formulate another clause which will take care of the situation and 
absolve them in the future. 

It seems to me that it should devolve upon the steamship lines to see that 
goods which they accept for transportation should have sufficiently clear dis¬ 
tinguishing marks to enable them to deliver same to consignee upon arrival. 
AVe know that when goods are exported from this country the steamship com¬ 
panies are very particular in this respect, but apparently their methods are 
very lax on the other side, and if the goods are illegibly marked or the marks 
are obliterated in transit, the steamship authorities endeavor to place the 
whole burden upon the consignee, who in most cases has paid for the goods 
in advance and should in no event be held responsible for the shortcomings 
of the shipper or the steamship lines. 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 407 


Even though the law may be reasonably explicit in setting forth the respon¬ 
sibilities of the steamship lines in connection with merchandise intrusted to 
their care, unfortunately there is no penalty attached for inserting clauses 
which may be at direct variance with the law, and the steamship lines un¬ 
questionably use such clauses as an argument in either delaying payments, or 
if the consignee is not posted as to his rights, rejecting a perfectly legitimate 
claim. 

I appreciate the fact that it is the function of the court to interpret the law, 
but realizing that you have given this matter careful consideration, I have ven¬ 
tured to take the liberty of encroaching upon your time to the extent of set¬ 
ting forth some of our troubles and asking your opinion as to whether the 
proposed law would relieve the situation in connection with the particular 
conditions mentioned. 

I can assure you your views on the subject will be deeply appreciated. 

Very truly, yours. 


Frank C. Overton, President. 


National Association of Waste Material Dealers, 

June 15, 1921. 


N. Sumner Myrick, Esq., 

Chamber of Commerce, Washington, D. C. 


My Dear Sir : Mr. H. F. Masman, traffic manager of our association, has 
forwarded to me a copy of your letter to him of May 24 relative to ocean bills 
of lading, and stating that the subject has had consideration by the American 
committee, in view of the meeting to be held in London by the transportation 
section of the International Chamber. 

While it seems reasonable to believe that any form of bill of lading which 
would meet the approval of ship owners, insurance writers, and bankers, would 
necessarily be an improvement over present methods, I can not but wish that 
consignees might be given an opportunity for a hearing, as it occurs to me 
that they may have problems which should properly have attention and which 
might not occur either to the insurance interests or the bankers, but which, in 
justice to the consignee, should have full and fair consideration. Whether the 
points I have in mind have had the attention of the committee or committees 
who have had the matter under discussion I, of course, can not tell, without 
seeing the preliminary draft of the bill that has been submitted. Would it be 
possible for you to furnish our association with any information on the sub¬ 
ject which would enlighten us as to what has been done or what is proposed, 
in order that we might submit a brief or offer suggestions in the premises? 

It would be impossible, in this letter, to attempt to enumerate the many 
methods which have been adopted by some lines to absolve themselves from 
reasonable liability under their bills of lading, and we are keenly interested 
in any efforts which are being made to improve conditons along these lines. I 
sincerely trust you can give us some information as to what is being done in 
the premises. 

What we would really like to see would be standard bills of lading and 
uniform legislation governing same, but if we can not have both at once, we 
would welcome standard bills of lading provided the terms of same are fair 
and equitable. If your efforts should result in the acceptance of this stand¬ 
ard bill of lading, and the results prove disappointing in practice, there would 
seem to be no alternative but to attempt to secure legislation which will ade¬ 
quately protect all parties at interest. ; 

We will await with much interest your reply advising whether you can give 
us any particulars relative to the preliminary draft of the bill you are dis¬ 
cussing. 

Very truly, yours, 


Frank C. Overton, President. 


COPY OF LETTER SENT TO VARIOUS ORGANIZATIONS, COVERING DIFFICULTIES EXPERI¬ 
ENCED BY IMPORTERS. 

~.. v i 

For some time past, and particularly during the past year, the losses and 
hardships which have been incurred by the members of this association in con¬ 
nection with the importation of rags and paper-mill supplies, having become 




408 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

so acute that this association feels constrained to approach the various trade 
organizations and chambers of commerce in the country with a view of seem¬ 
ing their cooperation in bringing about a change of conditions. 

The trouble has been due to many causes, among which may be enumerated 

the following: . , 

Insufficiency of packages, illegible marking, rough handling while m steamer s 
care, improper stowage, using bales as dunnage for other cargo, tearing of 
covers, with consequent destruction of marks and loss of contents, limited pier 
facilities, failure on part of steamer to segregate merchandise according to 
marks and bill of lading, conveying goods to lofts, involving extra expense in 
removing them, etc. 

We realize that the first two causes of trouble mentioned, viz, insecure 
packing and illegible marking, are faults of the shipper and not the steamship 
companies, and this association is cooperating with European assocations in an 
endeavor to overcome such difficulties, and has already made gratifying pro¬ 
gress in this direction. 

It is our opinion that the principal cause underlying most of the trouble is 
the attitude of some of the steamship companies in connection with the com¬ 
modities imported by our members. 

At a meeting of the representatives of steamship lines, transportation com¬ 
panies, and importers, held at association headquarters, some of the steam¬ 
ship representatives claimed that they were not responsible for marks or 
numbers, and were not obligated to deliver the identical packages called for 
by the bills of lading; that the ship’s responsibility ended when the goods left 
ship’s tackle; that the steamship line was not obligated to furnish pier space 
for cargo; but could discharge over ship’s side into barges at consignee’s ex¬ 
pense ; that bales damaged in transit should be repaired at consignee’s expense; 
that steamship was under no obligation to discharge goods where they could 
readily be removed by consignee, but the steamship could store them in lofts 
hundreds of feet away from point of delivery, and that consignee was respon¬ 
sible for any charges in connection with bringing same to a point where the 
railroads, trucks, or lighters could get possession of same. 

Since early in the war there has been such a demand for freight space that 
apparently some of the steamship companies (not all, fortunately) have be¬ 
come so obsessed with a sense of their importance that they apparently feel 
it is within their power to dictate any terms they choose, irrespective of ship¬ 
per’s rights, Harter Act, or any other law. 

Appended hereto are some extracts taken from ocean bills of lading which 
tell their own tale and show to what lengths some lines are willing to go in 
their attempt to protect themselves at the expense of their patrons. 

Our contention is that however desirable or undesirable certain class of 
freight may be, when steamship lines solicit or accept any freight they imme¬ 
diately assume certain well-defined obligations in connection with same. The 
Harter Act, approved February 13, 1893, says, under section 1: 

“ That it shall not be lawful for the manager, agent, master, or owner of 
any vessel transporting merchandise or property from or between ports of 
the United States and foreign ports to insert in any bill of lading or ship¬ 
ping document any clause, covenant, or agreement whereby it, he, or they shall 
be relieved from liability for loss or damage arising from negligence, fault, 
or failure in proper loading, stowage, custody, care, or proper delivery of any 
and all lawful merchandise or property committed to its or their charge. Any 
and all words or clauses of such import inserted in bills of lading or shipping 
receipts shall be null and void and of no effect.” 

After reading this refer to the extracts of bills of lading appended hereto and 
see how well some of the steamship lines are conforming to the requirements 
of the law. 

Every shipper and consignee is not posted as to his legal rights under a bill 
of lading, and in our opinion it should be against the law and punishable by 
a fine for any carrier to insert clauses in their bills of lading which are at 
variance with the law of the United States. 

Furthermore, we favor harbor laws that clearly set forth the duty of ocean 
carriers, consignees, and local carriers in connection with loading, unloading, 
segregating, and removing goods from pier; and, finally, we feel it would 
greatly facilitate business and avoid misunderstandings if the steamship com¬ 
panies could be induced to adopt a standard form of bill of lading. We re¬ 
alize that it is quite possible, because of port conditions in certain countries or 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 409 


in certain harbors, that it might not be practical to have one uniform standard 
wording for a bill of lading. If such is the case there might be several stand¬ 
ard forms designed to meet the local conditions. 

The steamship companies should insist upon having merchandise delivered 
to them in proper shipping condition and properly marked, and if there be 
exceptional cases where the condition of the goods tendered for shipment 
would not warrant the issuance of a clean bill of lading, then the steamship 
lines should have a letter of indemnity, guaranty, or bond from the shipper 
stating that the shipper would be responsible for any expense incidental to 
reconditioning the goods upon arrival and for any loss involved owing to 
poor marks or packing. 

An ocean bill of lading is supposed, by the average merchant, to be a nego¬ 
tiable document. He accepts drafts and draws drafts with an ocean bill of 
lading as security, and if a steamship company accepts merchandise and issues 
a bill of lading, the line should be obligated to deliver the identical goods re¬ 
ceived, in practically the condition in which they were received. This respon¬ 
sibility the steamship companies are apparently endeavoring to evade. 

When a shipper presents a document to a bank for the purpose of having his 
draft accepted, it should not devolve upon the banker to read every bill of 
lading through to see whether his security is worth anything. The fact that 
the steamship companies know that they could not legally maintain some of 
the clauses in their bill of lading is no excuse for inserting an improper clause. 

Fire insurance companies have a standard form of policy; the railroads of 
the country have a standard bill of lading, and the ocean steamship companies 
should be obliged to issue standard bills of lading covering merchandise im¬ 
ported into this country. 

We have no desire to work any injustice upon the steamship companies, and 
it is only fair to state that some of the responsible lines show every disposition 
to properly handle merchandise committed to their care, and to respect the 
rights of shippers and consignees. Neither is there any desire to offer excuses 
or ask special consideration for consignees who fail to do their part in promptly 
removing goods, and who attempt to utilize steamship piers as a warehouse for 
their merchandise. 

We can only speak authoritatively in connection with commodities handled 
by members of our association, but we imagine that importers in various lines 
must have to contend to a more or less degree, with the same problems. We 
believe that all lines of trade would be benefited if the hit and miss methods 
now in vogue in connection with foreign shipments were supplanted with a 
clean-cut code of procedure, and we believe in the long run the steamship lines 
themselves would be the gainers by the avoidance of misunderstandings, short¬ 
ages, and law suits which are bound to follow in the wake of present methods. 

What this association would like to see would be ocean bills of lading and 
harbor laws that clearly set forth the rights and duties of steamship lines and 
the consignees, the terms of which would be reasonable, practical, and equita¬ 
ble to all parties at interest. It seems manifest that if this could be brought 
about, it would be infinitely preferable to present methods, and this association 
believes the subject to be worthy of careful consideration. We shall be pleased 
to have the views of your organization, and any suggestions you may have to 
offer in the premises. 

Respectfully, yours, 


, Secretary. 


EXTRACTS FROM OCEAN BILLS OF LADING. 


“ Steamer has option to dispose of goods by destruction, dumping, sale, or any 
other way if consignees faif to take delivery within 72 hours after discharging 
of cargo.” 

“ Not responsible for any shortage through weakness of packing, nor for dis¬ 
appearance of the marks, the consignee being obliged to take delivery of the 
merchandise in whatever condition it may be found when discharged.” 

“ Goods herein mentioned to be discharged into barges or lighters immediately 
on arrival at receiver’s expense.” 

“ Steamer not responsible for marks nor for number of bales and broken bales 
or short weight on account of spilling or breaking of bands during the transport. 
Repacking, extra wharfage at the ports of discharge, if any, for account of 
owners of the goods.” 




410 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


“ If discharge of the goods is, or in the judgment of the master or agent of the 
steamer likely to be directly or indirectly prevented, delayed, or rendered unusu¬ 
ally difficult, dangerous, or costly by conditions at port of discharge or else¬ 
where of civil commotion, riot, insurrection, strikes, labor disturbances, or 
stoppage of labor of carrier’s employees or others, or lockouts by carriers or 
others, the steamer shall have liberty, without notice, in the discretion of the 
master or agent, at the risk and expense at all times of the shipper and/or con¬ 
signee and/or owner of the goods, either with or without, or before or after 
proceeding to the port of discharge, to prceeed to any port convenient to the 
steamer or to which it may be proceeding on the same or return voyage, or to 
return to port of shipment with the goods, or any part on board, and at any such 
port to discharge and store the goods and/or return, transport, or forward same 
to destination, all responsibility of the carrier as such being ended without 
notice immediately the goods leave the ship’s tackles, and all responsibility 
whatever being ended upon the same being delivered to warehouse or other car¬ 
rier, and the carrier hereinunder shall have a lien thereon for freight, back 
freight, and all expenses and charges hereunder.” 

“Also that if the goods are discharged on wharf or pier and are not removed 
by the consignee within 48 hours thereafter the consignee and/or owner shall 
pay a wharfage charge of $1 per 1,000 kilogram or cubic meter (ship’s option) 
per day, or any part thereof, and the steamship company shall have a lien for 
the whole of said charge upon the goods, or any part thereof, which lien shall 
survive delivery to the consignee, and said charge shall continue and be payable 
for any period that the goods may be held by or in behalf of the steamship com¬ 
pany as security for the payment of said charge.” 

“Also that the consignees or the party applying for their goods are to see that 
they get their right marks and numbers, and after the lighterman or wharfinger, 
or the party applying for the goods, has signed for same the ship and the owners 
are, respectively, discharged from all responsibility for misdelivery or non¬ 
delivery.” 


Joshua L. Baily & Co., 

New York, July Ilf, 1921. 

Hon. George W. Edmonds, 

Committee on Merchant Marine and Fisheries, 

House of Representatives. 

Dear Sir: We understand that your committee has under consideration 
amending the Harter Act so that transportation companies will be responsible 
for the full value of merchandise entrusted to their care. 

We beg to say we think it is most important that this step be taken at the 
present time to help American commerce, which is rapidly falling off. 

In the final analysis it is evident that the shipper must bear the expense of the 
loss incurred through theft and pilferage whether this added cost is included in 
the form of increased insurance rates or increased freight rates. This charge in 
the form of insurance has so enormously increased in the last year that, for in¬ 
stance, our insurance rates have been four times raised and in some cases are 
1,000 per cent above what they were a few months ago. 

The main question is how to lessen the total burden of these losses so- that 
American commerce can compete successfully with British, German, and other 
foreign countries. It is evident that the insurance companies who have no direct 
control over the merchandise can not to any very great extent prevent theft and 
pilferage, whereas if his extra load is put directly on the steamship companies 
efficiency will be encouraged and the best managed steamship companies will do 
everything possible to prevent the theft and the pilferage of merchandise under 
their control so that their freight rates will not have to be raised to such an ex¬ 
tent that it will turn business to better managed competing lines, and we be¬ 
lieve in this way the total loss will very materially be reduced, with great benefit 
to all American manufacturing interests and merchants engaged in exporting. 

It is furthermore evident from a selfish point of view to the exporter that 
whereas the insurance companies are very arbitrary and prefer to dispense en¬ 
tirely with theft and pilferage insurance, the steamship companies are not now in 
as independent a position, so on account of competition we do not believe that they 
will add to their freight rates as large a burden for the back of American com¬ 
merce to bear as are insurance companies, who have not capital invested in fixed 
properties, which they desire to keep operating. 

For this reason also we think it would be to the advantage of American com¬ 
merce to have the responsibility for losses placed on the transportation com- 


j 







THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 411 


parries, who are in control of the merchandise, and we most heartily indorse the 
suggested change to the Harter Act, which, as stated, we think most important 
for American interests at the present stage of commerce and industry. 

Very truly, yours, 

Joshua L. Baily & Co., 
By Fisheb C. Baily. 


American Bleached Goods Co. (Inc.), 

New York, July 14, 1921. 

Hon. George W. Edmonds, 

Committee on Merchant Marine and Fisheries, 

House of Representatives. 

Dear Sir: We understand that a hearing is to be held in a few days on the 
question of an amendment to the Harter Act, and we desire to go on record as 
strictly urging this amendment. 

We think that the original intention of the Harter Act was that carriers 
issuing a bill of lading should be held responsible for the actual value of package 
of merchandise where the carrier failed to deliver the package, or where the con¬ 
tents of the packages had been injured, or where part of the contents were 
missing. 

We believe this responsibility on the part of the carrier was intended in the 
Harter Act itself, but it appears that under various decisions the act has been 
given a different construction, so that at the present time the carrier’s responsi¬ 
bility is limited to $100 per case of merchandise, the contents of which may 
actually be worth many times that sum. 

It seems to us in every way proper that a full responsibility should rest with 
the carrier so that he may, while the goods are in his custody, take every reason¬ 
able precaution against theft and pilferage that the total value of the merchan¬ 
dise itself warrants. We think this aspect of the case is so obvious as to render 
it unnecessary to argue it out in detail. 

We trust the amendment to the Harter Act will have the approval of your 
committee, and be enacted in due course. 

Yours, very truly, 


Chas. Waring, 
Assistant Treasurer. 


Chas. Chipman’s Sons Co. (Inc.), 

New York, July 1\\, 1921. 

Hon. George W. Edmonds, 

Committee on the Merchant Marine and Fisheries, 

House of Representatives. 

Dear Sir : We are informed that hearings are scheduled to take place before 
your committee in Washington next week, and we urge upon you the absolute 
necessity of enforcing the Harter Act, not as it has been interpreted from time 
to time by the courts, but as was intended by the legislators when the act was 
placed upon the statute books. 

It is obvious that the only party who can adequately protect shipments is the 
steamship company, and to attempt to lessen the provisions of this act by 
reducing the force of this act is a direct evasion of the law. 

We are heartily in accord with the contention of the shippers in this matter, 
and hope and urgently ask that everything be done toward relieving this in¬ 
tolerable situation. 

Respectfully, yours, 

Chas. Chipman’s Sons Co. (Inc.). 

B. F. Larrabee, Second Vice President. 


\ 

Wilton Manufacturing Co. (Inc.), 

Netv York, July 15, 1921. 

Hon. George W. Edmonds, 

Committee on the Merchant Marine and Fisheries, 

House of Representatives. 

Dear Sir: We understand that your committee has consented to a con¬ 
ference with marine underwriters, shippers, and steamship companies con¬ 
cerning the prevention of losses entailed in forwarding merchandise to for¬ 
eign countries. 





412 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


It is well known that theft and pilferage on a large scale has caused serious 
losses to shippers and underwriters. We feel very strongly that the steam¬ 
ship companies have, in a large measure, been negligent through not giving 
adequate protection to merchandise entrusted to their care as carriers. The 
clauses in bills of lading which limit the carrier’s responsibility to $100 per 
package have, we believe, been largely responsible for the carrier’s negligence, 
and we feel that the carriers should be held accountable for the full value of 
any package which they receive for transportation, provided that in case of 
loss such full value is established as correct by the shipper. With the steam¬ 
ship companies’ liabilities limited, as they are at the present time, careless¬ 
ness and negligence in handling have become the rule rather than the exception, 
and theft and pilferage have thrived at the expense of the shipper or the under¬ 
writers insuring against theft and pilferage. 

We understand that an amendment has been proposed to section 1 of the 
Harter Act of 1893, 37 Statutes at Large, page 445, chapter 105. We wish to 
give our indorsement to the proposed amendment as submitted by the Trade 
Protective Association, The American Institute of Marine Underwriters, and 
the various trade associations cooperating with them in furthering this amend¬ 
ment. 

Yours, very truly, 

Wilton Manufacturing Co. (Inc.). 

Walter S. Poor, President. 


C. B. Hayward & Co. (Inc.), 

New York, July 15, 1921. 


Hon. George W. Edmonds, 

Committee on Merchant Marine and Fisheries, 

House of Representatives. 


Dear Sir: We are exporters of textiles to South America. We find the 
present limit of $100 of responsibility of carriers for loss a very serious detri¬ 
ment to our business and to American trade in general. Losses through rob¬ 
bery and pilferage cause serious delays in settlements of invoices, and, in ad¬ 
dition, the resultant high cost of insurance places an additional charge on our 
goods, in some cases more than our profit. 

Anything that causes American goods to be higher in price than European 
competing goods is a detriment to our trade at a time when we need that trade 
to keep our mils going. We believe that putting the responsibility on the 
carrier for proper delivery is the only solution of the problem. 

Very truly, yours, 


C. B. Hayward & Co. (Inc.), 
C. B. Hayward, President. 


Wm. Simpson, Sons & Co., 
Philadelphia, July U f , 1921. 

Hon. George W. Edmonds, 

Committee on Merchant Marine and Fisheries, 

House of Representatives. 

Dear Sir: We would beg to call your attention to the Harter Act to en¬ 
force the shipping carriers’ to assume full responsibility for taking proper care 
of goods entrusted to them for transportation. 

We are a firm of converters and commission merchants, doing a domestic 
and export business. Our export business in the last few years has run from 
a million and a half to two million dollars. We do our own shipping di¬ 
rectly to our customers in Central and South America and the Far East. We 
have claims for theft and pilferage against insurance companies which come 
direct to us and are collected by us for the benefit of our customers. We have, 
therefore, had considerable experience in following up these claims and are 
absolutely convinced that the first thing to do is to make the steamship com¬ 
panies absolutely responsible for goods under their care. As it is now, the 
steamship companies do not assume any responsibility over and above a small 
minimum charge for lost bales or cases, and it is absolutely imposible to de¬ 
termine when the loss or theft occurs whether it occurred in the steamship 
docks, in the steamship hold, or in the customhouse. 




THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 413 


I lie rates for insurance have enormously increased and to-day are assuming 
a real detriment to increased business. We realize, however, that this is not 
Ihe fault of the insurance company,and is directly traceable to the steamship 
companies themselves and to the thefts in the customhouses at the various 
ports in which the steamship calls. However, we do not believe it is possible 
to correct the theft in the customhouses until the theft in the steamship com¬ 
panies is first corrected. 

We therefore urge you to push this Hill with all possible speed. 

Yours, very truly, 


Wm. Simpson, Sons & Co., 
W. S. Godfrey, President. 


Amory, Browne & Co., 
New York, July ll f , 1921. 

Hon. George W. Edmonds, 

Committee on Merchant Marine and Fisheries, 

House of Representatives. 


Dear Sir : We, as the sole selling agents for 16 of the important American 
mills manufacturing cotton textiles, hosiery, blankets, and underwear, which 
have a large foreign distribution, feel that we should go on record as approv¬ 
ing of the proposed amendment to the Harter Act. 

We do not know when a matter of more vital interest to export shippers has 
been put before Congress, and unless some relief, as the adoption of this amend¬ 
ment affords, is given to shippers, there is no doubt but what it will seriously 
handicap the export business, which it is recognized is essential to the future 
prosperity of the United States. 

In the past the burden of theft and pilferage insurance, between the limited 
liability of the carriers as fixed by their bills of lading, of $100 per package, 
and the actual value of the merchandise, has been carried by the insurance 
companies. We are advised that the insurance companies’ losses have been 
so enormous that it has now reached a point where insurance premiums can 
not be placed high enough to offset the loss, and the underwriters have recently 
adopted a clause which places 25 per cent of the burden of such loss on the 
shippers. This, as you can readily imagine, will be disastrous as it relates to 
export business. 

It appears to us that the only way to stop theft and pilferage is to place the 
burden of the loss on those who can best prevent such loss, and whose interest 
will force them to take action to prevent theft and pilferage. 

Under this proposed amendment the steamship companies will be obliged to 
assume responsibility for the actual value of the merchandise they accept for 
transportation, and we believe it was the intent and purpose of the original 
Harter Act to so place the responsibility, but amendments and court decisions 
have changed the original Harter Act so that the steamship companies no 
longer assume what we believe should be considered their proper responsibility. 

We bespeak your careful consideration of the proposed amendment, and trust 
that you will lend your weight toward having same passed through Congress. 


Respectfully, yours, 


Amory, Browne & Co. 


Boston Insurance Company, 

Boston, Mass., July 18, 1991. 

Congressman Frederick R. Lehlbach, 

Chairman Subcommittee on Marine Insurance, 

House of Representatives. 

Dear Sir: In regard to the hearings on July 18, 19, and 20, held by your 
committee, in respect to the amendment of ocean and railroad bills of lading, 
I regret exceedingly that I am prevented from attending the hearings through 
my engagements at Plymouth (my home town), arising from the tercentenary 

celebration. _ . ... 

I am very much interested in the bill in questibn, and believe that action 
should be taken as suggested to increase the responsibility of the carriers. 

In the last three months the two insurance companies, of which I am presi¬ 
dent—the Boston Insurance Co. and the Old Colony Insurance Co. have had 
claims presented to them for losses by pilferage of over a quarter of a million 
dollars. 




414 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


It is impossible for us to give merchants and bankers the protection which 
they desire against the risk of pilferage and thievery, unless some check can 
be put on this ever-increasing loss. I can see no way of stopping pilferage 
except by making responsible for such losses the parties who have the mer¬ 
chandise in their care. Outside of careful packing, the shipper has no way 
of protecting his goods after they are delivered to the carrier. The insurance 
company has no way of protecting the goods. The only party who can protect 
them is the carrier. 

It has been claimed on behalf of the carriers that it is unfair to make them 
responsible for the pilferage, because some of the pilferages occur while the 
goods are in the hands of teamsters and forwarding companies before and 
after delivery to them. The answer to this, to my mind, is once you make 
a carrier responsible he will require that the packages are properly secured 
and sealed, so he can be satisfied that the goods are intact when delivered to 
him, and the party to whom the first carrier in turn delivers the goods will 
use equally good care to be sure that the packages are intact when delivered 
to him. 

Aside from the placing of the responsibility for the financial loss, this making 
each carrier watch carefully the condition of the packages while in his care, 
will have a tremendous effect in this way: To-day the thief rifling a package 
feels practically certain that the actual loss of the goods will probably not be 
detected until months afterwards, when the goods are delivered at some for¬ 
eign port, after going through the hands of various carriers, customhouse em¬ 
ployees, teamsters, etc., so that it will be practically impossible to determine 
just where and when the theft occurred, making it impossible, when the actual 
loss is determined months afterwards, to bring it Rome to the actual thief. 

With each carrier responsible for the theft while the goods are in his care, 
the Carrier will insist on the goods being properly secured so that there can be 
no concealed pilferage, and will detect any loss at once. 

The carriers should be responsible for the losses that occur while the goods 
are in their possession. To-day they limit their liability to a small amount or 
else insert in their bills of lading clause releasing them from all liability, such 
as the following: 

“ The said line shall not be liable for loss or damage before, after, or during 
loading or discharge, occasioned by * * ' * robbers or thieves, of whatsoever 
kind, whether on board or not or in the service of the owners * * * drainage, 
leakage, breakage * * * and that the carrier shall not be concluded as to 

correctness of statements herein of weight, quality, quantity, gauge, contents, 
and value.” 


Why should a merchant be required to put his merchandise for transporta¬ 
tion in the care of a carrier who declines or limits his responsibility arising 
from his lack of care of the goods? Once a carrier is made responsible for the 
loss of the merchandise in his care, as he should be, then this pilferage will be 
stopped. Until such action is taken pilferage will be a great menace to the 
business of the country, representing an increase in taxes to the merchant in 
the form of loss of his goods or premiums for insurance. 

I see no other way of stopping this terrific economic loss except by making 
responsible the only party who can exercise proper supervision over the ^oods 
to safeguard them. 

Yours, very truly, 

William R. Hedge, President . 


North Atlantic & Western Steamship Co., 

Boston , Mass., July 18, 1921. 

Merchant Marine Committee, 

Washington, D. C. 

Gentlemen : Under separate cover I forward you our views on the matter of 
loss of caigo tinough pillerage, breakage, or >other damage and nondeliverv. 
Tliis \\ <is wiitten at tli6 request of Mr. Davis, secretary of the Maritime Asso- 
ciation, Boston Chamber of Commerce. 

Yours, very truly, 


E. D. Sproul, Marine Superintendent. 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 415 


July 15, 1921. 

Memorandum on the Subject of Losses on Ships, Due to Pilferage, Break¬ 
age, and Short Delivery of Cargo. 

I. PILFERAGE AND THEFT. 

Assumption. —That among all bodies of men, whether longshoremen, checkers, 
or crew, there will be some who will have the tendency to steal unless pre¬ 
vented by the difficulty of breaking the package or the fear of detection and 
punishment. 

(A) On the dock. —To cut down losses by pilferage, the essentials are: 

1. A well-lighted shed, free from all dark corners and easy hiding places. 

2. Experienced watchmen whose honesty has been tested, who are acquainted 
with the methods of longshoremen, and who are paid a wage sufficient to live 
on and to do away with the necessity of supplementing it by conniving at 
thefts of cargo. 

3. A single exit, and a system of passes, so that no team or individual can 
leave the dock with any package unless authorized. 

4. A shed entirely locked at night when not in use, or an outside patrol to 
guard against theft of cargo by boat. (There are cases where cargo on dock 
has been stolen by butting through floor of dock from below and removing it 
by boat.) 

5. A locker where all cargo peculiarly liable to pilferage may be stored until 
the instant that it is loaded to the ship. 

(B) On the ship .— 

(I) To cut down losses by pilferage among longshoremen— 

1. Watchmen in all holds where cargo liable to pilferage is being loaded. 

2. Load all such dangerous cargo together, if possible against bulkhead and 
away from ladders used by longshoremen, bury cargo with other cargo before 
work is finished, or at any rate before vessel sails for another port of loading. 

3. Lock all manholes at close of work and place reliable watchman on ship 
to see that no hatches are disturbed. 

4. Place gratings in all ventilators leading to holes. 

(II) To prevent pilferage by crew— 

1. Keep all manholes locked during voyage. 

2. Open hatches only under supervision of officers. 

3. In cargo compartments which must be entered by members of crew for 
the purpose of getting stores, etc., stow all cargo liable to pilferage away from 
reach and solidly blocked in. 

4. Place gratings in ventilators. 

5. -Examine all bags, etc., of crew leaving ships. 

6. Keep sharp watch over side to avoid theft by boat. 

In general, the use of cartons to pack shoes, canned goods, etc., is to be 
deprecated, and the use of solid cases well strapped on ends is to be urged. 

Also, on the subject of lessening pilferage by longshoremen, prompt prosecu¬ 
tion and the imposition of severe penalty by the judges should have a deterrent 
effect. Some headway can also be made by endeavoring to get the same men 
to work on the ships and never having men convicted of stealing in the past. 
Efforts have also been made in the opposite direction to prevent by punishment, 
viz: To inaugurate a sort of honor system whereby longshoremen will prevent 
each other from stealing, this desirable end being apparently reached by making 
the men so contented by the use of rest rooms, lockers, shower baths, private 
exits from the docks, etc., that they will be ashamed to steal. 

II. BREAKAGE. 

Two main points must be considered : (A) Nature of containers; (B) methods 

of handling. . 

(A) On this point it would seem to be necessary to conduct a campaign of 
education among shippers which would explain to them the nature of strains 
and stresses to which packages are subjected in loading to the ship in slings 
and the pressure which they undergo in stowage in ship’s deck or holds. 


416 THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

1. Cartons of whatever nature and whatever the contents are too frail to 
withstand pressure of sling in loading, and the unavoidable handling in stowage 
and discharge, or their own weight in the slings. 

2. Cases must be made strong enough to withstand the weight of their con¬ 
tents and should be strapped. 

3. Crates of machinery, etc., must be thoroughly protected, and, if set up, 
parts liable to injury carefully covered, and must also be not only heavily 
skidded, but well braced with upright cross braces between uprights and heavy 
top boards to resist the inward pressure of sling during the lift. 

4. Crates of other goods, such as furniture, etc., are not acceptable due to 
their susceptibility to damage from other cargo, either by scratching or gouging, 
or actual breakage. 

(B) Much breakage may be avoided by the use of proper gear. e. g., can 
boards or airplanes for canned goods will partially do away with breakage 
of cases and bent cans caused by the sling alone, the use of nets for the 
loading of light cartons or light unprotected cargo, canvas slings on bags, etc. 

In handling, the use of the burton fall instead of stages, care of winchmen 
not to “ singe ” the fall in loading or discharging, the use of light skids in hold 
for dragging loads from bulkhead to the square of the hatch, avoidance of 
stanchions in dragging out loads, the use of trucks in decks for bringing loads 
out of long alley way, the use of dunnage in the square of hatch when landing 
loads in loading, or from square to ends when rolling in cases to be stowed, 
and the use of dunnage in stowage to distribute the weight and pressure are 
some of the methods which will lessen breakage. 

III. SHORT DELIVERY. 

Short delivery may be due to one or more of the following causes: 

A. The cargo may never have been received. 

B. The cargo may have been received but never loaded. 

C. The cargo may have been received and loaded, but never discharged. 

D. The cargo may have been received, loaded, and discharged, but delivery 
thereof never properly accomplished. 

(A) Th basis of the bill of lading is the dock receipt, as it is at the dock that 
cargo is received, tallied, and marks checked. To begin with, then, the bill of 
lading must follow the dock receipt, and not some shipper’s document, such as 
railroad bill of lading, forwarding shipping paper, invoice, etc. It is at the dock, 
then, that the error must be looked for, and here the human element comes in, 
for errors can be avoided only if the tallyman is honest, conscientious, and pains¬ 
taking. He must take all marks and numbers on every package, for by tallying 
every mark and number he lessens chances for error. If a discrepancy exists, it 
must be verified by an independent tally by chief clerk, and checked again upon 
loading to steamer. When large lots are received by team a separate tally must 
be made of each load and kept as part of the original records, for the chief clerk 
may make an error in his additions and issue final dock receipts for more than 
the actual amount (and it must be remembered on this point that, though the 
bill of lading is prima facie evidence of receipt and of ship’s responsibility for 
quantity shown, it may be refuted by proof that the total amount was not 
actually received). 

On this point, too, what was said about the system of team passes and a single 
exit under I (A), 3 above, applies here as well and otherwise connivance with 
teamsters would be possible. 

(B) Under this head comes all that was said under pilferage and theft above. 
To locate the loss it is necessary to make a careful tally of freight into the ship 
and where theft or pilferage has been discovered make the proper notation, giv¬ 
ing a copy of all tallies into ship to first officer, and making him responsible as 
far as possible for delivery of all cargo actually loaded. 

(C) Under this head we may refer to what was said under pilferage and theft 
on the ship. 

In addition, of course, we have the possibility of loss due to stevedores in dis¬ 
charge. Careful record must be made of any such loss and stevedore held respon¬ 
sible. In the Current News there is a case before the underwriters of short 
delivery of a piece of machinery weighing 50 tons which was proven to have 
been actually loaded into ship and some years ago there was a case of short 
delivery of a large boiler on a ship from New York to South Africa, clearly a 
case where the piece had been lost overboard and short delievry reported in an 
attempt to clear those responsible. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 417 


(D) Losses due to this cause may be occasioned by pilferage on the dock or 
theft from the dock, both of which have been covered before under pilferage and 
theft on the dock ; or by errors in the tally or tally clerks, also covered sufficiently 
above. 

H. Paekman, Jr., Dock Superintendent. 

N. B.—In the above discussion we have not considered the problem that arises 
from the fact that the case received as containing shoes, for example, may 
actually contain shoe boxes filled with bricks and excelsior substituted by the 
shipper or by theft en route to the dock. What the remedies for this evil are I 
do not know. 

On the subject of insurance, if insurance companies ceased to write theft and 
pilferage insurance there would certainly be a tendency on the part of the steam¬ 
ship companies to exert greater effort to prevent and detect pilferage, and, per 
contra, if claims are delivered on account of insufficiency of package, and lack 
of straps, shippers would be forced properly to case their goods so as to make 
pilferage more difficult. 

H. P., Jr. 


Appendix I. 

REPORT OF THE IMPERIAL SHIPPING COMMITTEE ON THE LIMITATION OF SHIP¬ 
OWNERS’ LIABILITY BY CLAUSES IN BILLS OF LADING AND ON CERTAIN OTHER 

MATTERS RELATING TO BILLS OF LADING. 

We, the imperial shipping committee, acting under the first part of our 
terms of reference, have inquired into complaints (a) from the Association of 
British Chambers of Commerce, in the shape of a resolution passed at Glasgow 
on July 7, 1920, in favor of legislation to prevent the limitation of the liability 
of shipowners by clauses in bills of lading; (h) from the Imperial Council of 
Commerce, in the shape of certain resolutions to the same end passed at Toronto 
on September 21, 1920; and (c) from other bodies to the same effect. 

Having regard to the terms of our appointment, we beg leave now to report 
our conclusion upon this subject to all the Governments of the Empire, since 
they are all concerned. 

1. The question of the limitation of shipowners’ liability by clauses in bills 
of lading was first brought to the notice of the imperial shipping committee 
by the Association of British Chambers of Commerce in a letter dated July 
29, 1920, which called attention to the following resolution adopted by that 
body at their quarterly meeting held at Glasgow on the 7th idem : 

“ That the Government be urged to introduce legislation whereby it shall be 
enacted that any stipulation inserted in a contract for carriage by sea by 
which the liability of the carrier to accept a proper measure of responsibility 
for the safe custody and delivery of goods intrusted to his charge for carriage 
is restricted or eliminated shall be null and void. The attention of the Gov¬ 
ernment is invited to the fact that legislation on similar lines has already 
been enacted by the United States of America, the Dominion of Canada, the 
Commonwealth of Australia, and other countries, 1 for the protection of shippers, 
and that the Dominions Royal Commission, in its report presented to both 
Houses of Parliament March, 1917, unanimously recommended legislation on 
the lines in question.” 

2. Letters in support of the resolution were received from the Liverpool and 
Dublin Chambers of Commerce, from the Liverpool Underwriters’ Association, 
and the Association of Insurance Brokers and Underwriters in Glasgow. 

3. In October, 1920, the Imperial Council of Commerce brought to our notice 
the following resolutions on the subject of liability clauses in bills of lading 
which were passed at the congress of chambers of commerce of the British Em¬ 
pire of Toronto in September, 1920: 

“ That in view of the multiplicity of saving clauses inserted in bills of lading 
by all shipping companies this congress is of opinion that legislation should be 
introduced into the British House of Commons and the Parliaments of the 
various Dominions upon the lines of the Harter Act of the United States of 
America. 


1 For particulars of the legislation see Appendix II, p. 18. 
60683—21-27 





418 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


•‘Thai bills of lading bo framed on more equitable lines, and. in particular, 
that shipowners should not be permitted to exempt themselves from liability 
for ship’s negligence. 

“ That, with a view to uniformity of practice, so that past and future legal 
decisions may be of far-reaching value, the various oversea Dominions that 
have enacted ‘ sea carriage of goods ’ act or acts of that nature be asked to 
repeal same and enact in lieu thereof the United States Harter Act, and that 
all other parts of the Empire, including the United Kingdom, be invited to 
place an act similar to the Harter Act on their statute books, thus creating 
within the Empire uniformity of shipowners’ responsibility for the receipt, 
care, custody, and delivery of cargo intrusted to them. 

4. The Dominions Royal Commission made definite recommendations upon 
this subject during the war, 2 but owing to war conditions no action followed, 
and having regard to the large amount of interest evinced in commercial circles 
and to the fact that we were specially constituted and appointed to deal with 
such questions, we felt that it was incumbent upon us to review the position 
with the object of reporting upon it as our terms of reference required. Inas¬ 
much as the evidence given before the Dominions Royal Commission was avail¬ 
able to us. we thought it sufficient to take typical evidence to bring our mate¬ 
rial up to date, and accordingly invited the Association of Chambers of 
Commerce, as representing the shippers and importers; the above-mentioned 
underwriters’ associations; the committee,of Lloyds; and the London Institute 
of Underwriters, as representing the insurance interests; and the Chamber of 
Shipping of the United Kingdom and the Liverpool Steamship Owners’ Asso¬ 
ciation, as representing the shipowners, to nominate witnesses to give evidence 
before us. In so doing we suggested that the evidence given before the 
Dominions Royal Commission should be taken into consideration, and there 
was general concurrence in this suggestion. 

5. We have obtained the views of the Canadian, Australian, and New Zealand 
Governments in regard to the success or otherwise of their legislation, and we 
refer to their replies at paragraph 26 below. 

6. The evidence taken hy the Dominions Royal Commission on the subject 
of the limitation of shipowners’ liability by clauses in hills of lading was as 
follows: 

(1) In Australia in May, 1913. that of Mr. Percy T. Berry, member of the 
Melbourne Chamber of Commerce; of Mr. S. J. Jacobs, Mr. Alfred Le Mes- 
surier, and Mr. Caleb Allen, all of the Adelaide Chamber of Commerce, and 
of Mr. William Leslie, of the Perth Chamber of Commerce. (See pp. 222 to 
245 of Cd. 7171.) 

(2) In London in January, 1914, that of Mr. E. B. Tredwen, chairman of 
the Australasian section of the London Chamber of Commerce; of Mr. H. R 
Miller, of the Chamber of Shipping of the United Kingdom; and of Mr. J. L. 
Wilson Goode, of the Manchester Association of Importers and Exporters (see 
pp. 34 to 63 of Cd. 7351) ; the evidence on the subject of bills of lading clauses 
is intermingled with that on freights) ; and in June. 1914, Sir Norman Hill, 
secretary of the Liverpool Steamship Owners’ Association, gave evidence on this 
question. (Again, together with evidence on other subjects, see pp. 15 to 40 in 
Cd. 7710.) 

(3) In Newfoundland Mr. H. W. Le Messurier, deputy of customs of New¬ 
foundland, and Hon. John Harvey, M. L. C., of Messrs. Harvey & Co., mer¬ 
chants and shipping agents, gave evidence in July, 1914. (See pp. 30 to 32 of 
Cd. 7898.) 

(4) In Canada evidence was taken in September, October, and November, 
1916, from the following witnesses: Mr. J. J. Shalcross, of the Victoria Board 
of Trade; Mr. W. F. McClintock, claims agent for Messrs. Kelly, Douglas & 
Co., members of the Vancouver Board of Trade; Mr. T. E. Marshall, manager 
of the traffic department, Toronto Board of Trade; Mr James E. Walsh, 
manager of the transportation department, Canadian Manufacturers’ Asso¬ 
ciation ; Mr. James Carruthers, of Messrs. James Carruthers & Co., grain ex¬ 
porters ; Mr. Z. Hebert, of the Montreal Board of Trade; Mr. Th. Wardleworth, 
of the National Drug & Chemical Co. of Canada ; Mr. Thomas Robb, secretary 
of the Shipping Federation of Canada; Mr. G. B. Ramsey; and Mr. O. W. 
Bodard. (See Cd. 8458, pp. 314-368, passim.) 


2 Pars. 595-603 of the final report of the Dominions Royal Commission, dated Feb. 21, 
1917. 



THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 419 


i. I his e\ idence we have duly considered, and in addition we have examined 
the following witnesses: 

(1 ) Mr. E. R. r l redwen, chairman of the merchants’ committee of the 
Australasian section of the London Chamber of Commerce and of the Austra¬ 
lasian Merchants’ Association, senior partner in Messrs. Gilbert J. McCaul & 
Co., merchants, of London, on October 21, 1920. 

(*_M Mr. J. A\ . Allen, J. I\, president of the Hull Chamber of Commerce, 
senior partner in T. W. Allen & Sons, timber merchants, of Hull, and chair¬ 
man of the lumber section of the timber trade federation of the United 
Kingdom, on October 21. 1920. (Mr. Tredwen and Mr. Allen appeared in 
iespouse to our nidation to the Associated Chambers of Commerce to nominate 
witnesses.) 


(.1) Mr. .1. P. Rudolf, chairman of the council of the Liverpool Chamber of 
Commerce, underwriter of the Standard Marine Insurance Co., and member of 
the committee of the Liverpool Underwriters’ Association, who appeared in 
response to our invitation to the Associated Chambers of Commerce, but also 
on behalf of the Liverpool Underwriters’ Association and the Glasgow Asso¬ 
ciation of Underwriters, on October 21, 1920. 

(4) Sir Norman Hill, Bart., secretary of the Liverpool Steamship Owners’ 
Association, and on their behalf, on October 28, 1920. 

(5) Mr. L. C. Harris, of Ellerman & Bucknall Steamship Co., on behalf of the 
Chamber of Shipping of the United Kingdom, on October 28, 1920. 

((>) Mr. E. A. Nicholls. of the London Assurance Corporation, on behalf of the 
Institute of London Underwriters, on November 4, 1920. 

(7) Mr. S. A. Boulton, chairman of Lloyd’s committee, and on their behalf, on 
November 4, 1920. 

(8) Mr. F. H. Carey, claims adjuster to the London Assurance Corporation, 
nominated by Lloyd’s committee, on November 18. 1920. 

(9) Mr. J. S. McConechy, joint honorary secretary to the Manchester Associa¬ 
tion of Importers and Exporters, and on their behalf, on November 18, 1920. 

(10) Mr. Richard D. Holt, J. P., of Alfred Holt & Co., shipowners, of Liverpool, 
on January 7, 1921. 

8. In addition to the expressions of opinion by commercial bodies on the sub¬ 
ject of the limitation of shipowners’ liability by clauses in bills of lading which 
are quoted in paragraphs 1 and 2 above, we have received other important com¬ 
munications as follows: 

(i) A resolution adopted at a meeting of the agents general for the whole of 
the Australian States held on December 22, 1920, in favor of legislation by the 
Imperial Parliament on the basis of the Australian sea carriage of goods act, 1904. 

(11) Recommendations (through the Associated Chambers of Commerce of the 
Commonwealth of Australia) from the Adelaide Chamber of Commerce in favor 
of— 

( a ) The universal adoption of the provisions of the sea carriage of goods 
✓ act, 1904; 

(b) The adoption of a just and equitable model form of bill of lading; 

(c) Measures to secure that shipowners shall afford the consignees sufficient 
opportunities for the establishment of just claims and the settlement thereof by 
agents; 

(d) The adoption of certain requirements in connection with through bills of 
lading. 


(iii) A communication from the Federation of British industries calling 

attention to the conclusions of an important meeting of certain of their members 
held at Manchester on December 10, 1920, at which it was urged that bills of 
lading should be simplified and rendered as uniform as possible, and in par¬ 
ticular expressing the views that “ the clause stating that shipowners are not 
liable for losses of goods * * * capable of being covered by insurance is a 

direct premium on carelessness,” and that “ bills of lading should not be altered 
without previous consultation with the other parties to the contract.” 

(iv) Communications, containing similar references to the subject, from 
bodies associated with particular trades, such as the Auckland Importers’ and 
Shippers’ Protection Association (Ltd.), the Association of West African Mer¬ 
chants, and the Barbados and Karachi Chambers of Commerce. 

9. We have thought it unnecessary to print at length the additional evidence 
taken by us, although it has been duly recorded. We have, however, had pre¬ 
pared. and we append to this report, a full digest of the arguments advanced on 
behalf of the three principal interests concerned (Appendix I). 


420 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


10. We do not propose to repeat in the body of this report many of the lmnor 
points which find their place in the appendix, but shall confine our discussion of 
the subject to the broad considerat'ons which have decided our judgment and 
brought us to unanimity. These considerations fall into three categories: 

(a) Commercial considerations. 

( b ) Uniformity of law and practice. 

(c) Imperial considerations. 

11. Commercial considerations. —By the common law of England the ship¬ 
owner is responsible for the safe carriage and delivery of goods committed to 
his charge as a common carrier, unless prevented by certain definite causes, such 
as the act of God or the King’s enemies, but there is nothing in English law to 
stop him from contracting out of the whole or any part of his liability, and by 
a practice which has gradually extended since about 1880 British shipowners do 
habitually in their bills of lading contract themselves out of their common-law 
liability to a large extent. 

12. The liability of the shipowner relates to risks of two kinds. There are 
“navigation risks,” due to perils of the sea and other incidents of navigation, 
and there are “ carriers’ risks,” which are those of loss or damage to goods 
arising in the course of their receipt, stowage, custody, and delivery by the 
shipowner and his servants. The present demand for legislation is to prevent 
the shipowner from contracting out of his liability in respect of “ carriers’ 
risks ” only. By general consent of all the parties concerned he should continue 
to be free to relieve himself of his liability in respect of “ navigation risks.” 

13. The evidence before us has been to the effect that although shipowners 
protect themselves in their bills of lading from legal liability, yet the practice 
among many of them is, in fact, to pay reasonable claims for loss or damage to 
goods. Such practice is not, however, universal, and on behalf of the shippers 
it was urged that claims should be paid as of right and not merely ex grat a. 

14. Freedom of contract, which is the basic principle of modern commerce, 
assumes, of course, that both the parties to a bargain are free. It has been rep¬ 
resented to us, on the part of the shippers, that they are not wholly free when 
contracting with shipowners, because the liner companies or conferences enjoy 
in many cases a position approximating to monopoly, and that as a consequence 
shippers are not able to obtain the elimination of the clauses objected to without 
the help of legislation. We do not think it necessary to discuss in this connec¬ 
tion whether a monopoly or quasi monopoly does in fact exist in some trades 
and in what degree. Statements from various points of view on this subject 
will be found in Appendix I. We are content to accept the broad fact that from 
whatever cause the practice of inserting the contracting-out clauses in bills of 
lading continues, notwithstanding that there is a widespread and persistent 
demand among commercial organizations throughout the Empire for legislation 
to render such clauses illegal. 

15. We find ourselves, therefore, in this position, that on the one hand the 
shippers submit to the insertion of the clauses in question, and yet, through their 
organizations, generally object to them, and on the other hand the shipowners 
insert the clauses, and yet many of them, and perhaps a majority, do not as a 
rule avail themselves fully of the rights which they so obtain. It seems to 
follow from such a situation that there is at any rate a prima facie case for 
legislation in the sense asked for, and that, as the Dominions Royal Commission 
remarked in their final report, such legislation would appear likely to be a pro¬ 
tection rather than otherwise to such shipowners as make it a practice to pay 
reasonable claims. 

16. It will be admitted, we think, that there are good general grounds, for 
obvious economic reasons, for maintaining as far as possible the rule that a con¬ 
tractor should be responsible for the negligence of his servants. All agree, 
however, that there is no ground for interfering with the shipowner’s freedom 
of contract with regard to his “ navigation risks,” and it is argued that it would 
make for simplicity if he were also allowed to continue to contract himself out 
of his “ carriers’ risks,” thus, in effect, throwing upon the shipper’s underwriter 
the whole of the risks of every kind. Such simplicity does not, however, under 
present conditions appear to be attainable, for since pilferage has become rife 
underwriters, both in London and Liverpool, have not only refused to cover 
“ risks of whatsoever kind,” but have also refused to cover more than 75 per 
cent of the losses due to pilferage. Their object, it was explained to us, was to 
make shippers more careful in packing and shipowners more diligent in super¬ 
vising their servants. 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 421 


17. A more serious matter at first sight is the fact that as a result of the 
proposed change of law the shipper would find himself, in the event of loss, with 
a claim only against a shipowner instead of an indemnity under an insurance 
policy. We can not believe, however, that this argument has very much practi¬ 
cal force in view of the strong financial position of the great liner companies. 
It may be assumed that other shipowners would cover themselves by insurance 
with underwriters or mutually. None of our witnesses contemplated that ship¬ 
owners liability should extend beyond a reasonable limit of value, an important 
point to which we shall refer again. 

18. We have considered the apprehensions expressed lest the passing of such 
legislation should operate to the detriment of British trade in competition with 
that of other countries in which bills of lading can be issued free from any such 
restriction. We are inclined to think that the fear of such foreign competition 
has little substance. Our chief competitor under present conditions is the 
United States, and there the Harter Act forbids contracting out. In Japan, 
article 592 of the Commercial Code provides that “ the shipowner can not even 
by an express agreement be exempted from liability for damage caused by his 
own fault or by the bad faith or the gross fault of a mariner or of any other 
person employed or by the unseaworthiness of the ship.” In France, Sweden, 
and Norway the present legal position is, it appears, very much as in the United 
Kingdom, but there has long been and still is active pressure in France for 
legislation on the lines of the Harter Act. and in Scandinavia generally the 
question of obtaining similar legislation is being actively discussed. According 
to the report of the Dominions Royal Commission, the largest German com¬ 
panies, as the outcome of agreement between them and the shippers, adopted 
before the war a bill of lading which accepted on behalf of the shipowners the 
carriers’ risks. Nor should it be forgotten that in practice British shipowners 
already pay a large part of the claims made against them. 

19. It was suggested to us in evidence that had refrigerated carriage not been 
well established in the trades affected at the dates of the passing of the Harter 
Act and of the similar Dominion acts, their provisions might have prevented the 
initiation or development of that method of sea transport, as the shipowner 
would have refused to bear the unknown risk. It was urged that in any new 
legislation provision should be made for the transfer of liability to the trader in 
respect of similar developments in the future. We were impressed by this argu¬ 
ment and shall refer to it again later, as also to the need of so limiting the terms 
of legislation as to avoid any hardship on the shipowner, such as the attachment 
to him of liability for matters in regard to which he has no real control. 

20. Subject to the necessary safeguards to meet the difficulties indicated, 
which are dealt with in subsequent paragraphs, we feel that on commercial 
grounds there is probably an advantage to be gained by the proposed change. 

21. Uniformity .—The advantages of uniformity in the shipping laws of the 
several countries which form the British Commonwealth of Nations are mani¬ 
fest. At present there is legislation on the subject of shipowners’ liability in 
respect of carriers’ risks in Canada, Australia, and New Zealand, and there is no 
corresponding legislation in the United Kingdom, India, South Africa, or 
Newfoundland. 

22. An analysis of the three Dominion acts, and also of the Harter Act, is 
attached as Appendix II. It will be seen that they are far from uniform in their 
provisions. 

23. The chief difference between the Australian act and the rest of the legis¬ 
lation is the provision of section 8 (1) to the effect that in every bill of lading 
there shall be an implied warranty of seaworthiness at the beginning of the voy¬ 
age, while the other acts are satisfied by the exercise on the part of the ship¬ 
owner of due diligence to see that the ship is seaworthy in every respect and is 
properly manned, equipped, and supplied. 

24. We should perhaps point out that the difference in effect between the exer¬ 
cise of due diligence and the absolute warranty of seaworthiness is that the 
former makes allowance for defects which could not have been discovered by the 
exercise of ordinary care, while the latter does not. We think that the former 
is the more reasonable requirement, since the principle that the shipowner 
should not be liable for what is not within his control is conceded in the matter 
of navigation risks. 

25. We think that the assimilation of the Australian law on this point with 
that of the rest of the Empire should be part of the uniformity to be effected. 

26. We have, as stated above, consulted the Canadian, Australian, and New 
Zealand Governments in regard to the success or otherwise of their legislation, 
and their replies are to the effect that there is general satisfaction in all these 


422 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


Dominions with the way in which the several acts have operated. Moreover, in 
each of these Dominions there is a tendency to press for the extension of the 
existing law either to inward shipments or in some other way. It is hardly 
necessary to point out what difficulties would arise if any Dominion sought in 
this way to apply its own law to the bills of lading issued elsewhere. It is 
evident that uniform laws throughout the Empire would secure the object in a 
much better way so far as interimperial trade is concerned. 

27. We attach much weight to the advantage of uniform law on this subject 
throughout the Empire. 

28. Imperial considerations. —A greater boon to the British Commonwealth 
than uniformity in the laws of its several parts, though this is in itself no 
mean aid to solidarity, would be the removal of that discontent on the part 
of shippers in regard to shipping conditions generally, which undoubtedly 
exists, more especially in the Dominions. Though the majority both of ship¬ 
pers and shipowners must recognize on any far-sighted view that their interests 
are not divergent, yet there must always be occasions for disagreement between 
the two, and it would appear that the character of these clauses in bills of 
lading has served as a rallying point for discontented shippers. 

29. While the shipowners are very largely centered in the United Kingdom, 
in the Dominions the shippers predominate, and misunderstandings between the 
two commercial interests tend therefor to create divergencies between the 
views of the countries themselves. 

30. It appears to us of the highest importance that all causes of dissension 
between these great interests, whose harmony is essential to the strength of the 
British Commonwealth, should be promptly removed as they arise. 

31. Conclusion and recommendations. —As the result of the considerations 
outlined above under the three several heads we have come unanimously to 
the following conclusion: 

That there should be uniform legislation throughout the Empire on the lines 
of the existing acts dealing with shipowners’ liability, but based more precisely 
on the Canadian water carriage of goods act, 1910, subject to certain further 
provisions in regard to— 

(i) Exceptional cases in which goods should be allowed to be carried by 
shipowners at owner’s risk; 

(ii) The precise definition of the physical limits to the shipowner’s liability; 

(iii) The fixing of maximum values for packages up to which shipowners 
should be liable to pay. 

32. We make the Canadian water carriage of goods act, and not the Harter 
Act which it closely resembles, the basis of our recommendation, because it 
embodies the latest experience. It was passed in 1910, whereas the Australian 
sea carriage of goods act was passed in 1904 and the New Zealand shipping and 
seamen act, certain sections of which deal with shipowners’ liability, was 
passed in 1903. The Harter Act was passed in 1893. 

33. Provision for exceptional risks. —We attach great importance to the 
provisions (i), (ii), and (iii) of our recommendations above. In the first 
place we would make provision for exceptions in the case of special kinds of 
goods or methods of carriage. All the Dominion acts except live animals from 
their operation and the Canadian act excepts lumber and other “ wood goods.” 

34. It is clearly requisite to provide for the exceptional treatment of new 
kinds of goods and methods of carriage so that traders and others wishing to 
initiate new developments may not be met by the impasse that the shipowner 
is unwilling to take the unknown risks and can not get rid of his liability in 
respect of them. It is thought that voyages to certain ports or places might 
also be, or become, subject to such extraordinary risks that they might properly 
be excluded from the operation of the proposed legislation. 

35. We believe that such exceptional cases are likely to be very few, but we 
think it important that rlie new legislation should contain provisions for defin¬ 
ing what articles, voyages, or methods of carriage ought to be excepted from its 
operation on the ground that the risks attached to the carriage or voyage are 
so new or uncertain that it is inexpedient that the act should apply; and 
further, that inasmuch as such risks will in most cases be likely to become 
ordinary risks as the trade in question develops, there should be power to 
remove such exceptions. 

36. Extent of physical limits within which liability should obtain. —The 
governing terms of the existing Dominions’ legislation on this subject are to the 
effect that the owner, manager, agent, master, or charterer of any ship must 
not be relieved from liability for loss or damage arising from negligence, fault 
or failure in the proper loading, stowage, custody, care, or delivery of goods 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 423 

received by him to be carried in or by the ship, nor must the obligations of 
the master, officers, agents, or servants of any ship to handle and stow goods 
carefully, and to care for, preserve, and properly deliver them be lessened, 
weakened, or avoided. 

37. Difficulty arises as to the determination of the point at which any damage 
or loss may have occurred, but we feel that so long as all reasonable precau¬ 
tions are taken to check the soundness and quantity of the goods when they are 
transferred from one responsible carrier to another this difficulty is not in¬ 
superable. For our present purpose it is only requisite to consider what pro¬ 
tection the shipowner should be given in order that he may not have to accept 
liability for that which is not within his control as a shipowner. In this con¬ 
nection it should be kept clearly in mind that the form of the proposed legisla¬ 
tion is not to create any liability, but to prohibit the practice of contracting out 
of an existing common law liability, and so far as we are aware the decisions 
at common law are not regarded as having been unfair to the shipowner. 

38. In accordance with the modern methods of commerce there are frequent 
cases where the shipowner, especially the liner owner, performs services as 
forwarding agent or warehouseman before “ loading ” or after “ delivery from 
the ship.” We think that the new legislation should not affect such services 
which we understand are not covered by any of the existing Dominion acts. 

39. The bill of lading purports to be a receipt for the goods to be carried, 
as well as the contract for their carriage. Since the normal bill of lading opens 
with the word “ shipped,” the liability begins with the “ loading ” and no ques¬ 
tion arises. In the case, however, of a “ received for shipment ” bill of lading or 
other equivalent document, the proposed uniform legislation should not affect 
services prior to “ loading.” 

40. Similarly, in regard to the close of the voyage, services by the shipowner 
when acting as warehouseman or forwarding agent subsequent to “ delivery 
from the ship ” should also not be affected. 

41. There are, no doubt, cases in which the master and officers are unable effec¬ 
tually to control actual discharge from the ship, but it would appear important in 
the general interests of commerce that any such undesirable conditions in foreign 
ports or elsewhere should be the subject of representation and other pressure 
upon the governments or authorities responsible. Only in very exceptional in¬ 
stances do we think that a justifiable case will arise in which permission should 
be granted to shipowners to curtail their liability and to limit the operation of 
the legislation so as to exclude delivery while not exempting the voyage itself. 

42. The new legislation should, however, provide for the granting of the neces¬ 
sary permission in such exceptional cases. 

43. Maximum monetary limits to liability. —Section 8 of the Canadian water 
carriage of goods act, 1910, states: 

“ The ship, the owner, charterer, master, or agent shall not be liable for loss 
or damage to or in connection with goods for a greater amount than $100 per 
package, unless a higher value is stated in the bill of lading or other shipping 
document, nor for any loss or damage whatever if the nature or value of such 
goods has been falsely stated by the shipper, unless such false statement has been 
made by inadvertance or error. The declaration by the shipper as to the nature 
and value of the goods shall not be considered as binding or conclusive on the 
ship, her owner, charterer, master, or agent.” 

44. It is noticeable that the limit of $100 imposed by the act is low compared 
with the limit voluntarily imposed by the shipowners in other trades. The act, 
apparently leaves it open to the shipowner to charge a higher freight for pack¬ 
ages of which the declared value is over $100. 

45. Neither of the other similar Dominion acts nor the Harter Act contains 
any provision of this kind, and although the Harter Act purports to render it 
illegial for shipowners to contract out of their liability for loss of, or damage 
to, goods, nevertheless, the United States courts have held that it was com¬ 
petent for a carrier of goods to agree with the shipper upon the valuation of the 
property carried, so that the carrier assumes liability only to the extent of the 
agreed valuation. The view has been expressed to us that, in effect, shipowners 
could evade their liability under any of the existing legislation except, perhaps, 
the Canadian act, by “ agreeing ” an extremely low value for goods with the 
shipper. 

46. It appears to us that it will be necessary in the new legislation : 

(1) To provide for the settlement of a reasonable maximum “value” as the 
limit of liability, or, probably, several such limits for the various trades, and 
to provide in some way for changes to be made to accord with any altered con¬ 
ditions in the freights and values. 


424 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


(2) To prevent evasion of the general liability by any system of low or 
nominal agreed values. 

47. As regards (1), it would appear that in prewar times the maximum limits 
inserted in the bill of lading bore a rough relation to the average value of the 
goods carried in the trades concerned, and small complaint was made. Recent 
sudden changes in prices have rendered these customary limits inappropriate, 
and in some trades readjustments have been made. On the whole, we feel 
that probably the best way to deal with the matter would he to leave the ship¬ 
owners to insert their own reasonable maxima in agreement with the shippers 
in each trade, but with permission for an appeal by any interested party to 
some independent authority in the event of the maximum not being thought 
reasonable. In the case of exceptionally valuable articles such as gold and 
precious stones, we think that a duty should be incumbent on the shipper of 
declaring the contents and value of the package at the time of shipment. 

48. Methods of dealing with exceptions and limits; proposed imperial body .— 
It will be seen that for the smooth working of the proposed legislation we 
think that a certain elasticity will be necessary at three points: 

(i) As to new and exceptional articles, voyages, and methods of carriage; 

(ii) As to the curtailment of liability in exceptional circumstances; 

(iii) As to the monetary limits of liability. 

49. The statutory provision in regard to each of these three categories might 
be in such terms as to leave the application in particular cases to be decided by 
the ordinary courts of law. The courts would have to decide, for example, 
whether particular risks came by reason of their novelty witin the exceptions 
intended by the enactment, or whether a limit of liability was reasonable. This 
would be a feasible course, but, in our opinion, one attended with two grave 
defects. 

50. In the first place, this method would not afford the elasticity which is 
particularly necessary in dealing with the details of commercial practice. The 
ordinary courts must, of course, remain the interpreters of the common law, 
whose operation on this subject would be restored by the new statute law, but 
we think that a specially constituted body, whose members should preserve 
close contact with commercial conditions, would be better adapted to make the 
kind of decision that is required. 

51. In the second place, reference to the courts of law might not secure the 
imperial uniformity which appears to us to be so desirable. There would prob¬ 
ably be conflicts of decision as between the courts in the different countries of 
the Empire, and, even if appeal to the privy council were practicable it would 
be a very expensive and prolonged process, quite unsuited to the special pur¬ 
pose in question. 

52. Having regard to these arguments and to the great importance we attach 
to the preservation of uniformity throughout the Empire and to the elastic 
working of the legislation, we have considered the alternative of providing for 
the reference to a special body, common to the whole Empire, of the particular 
questions and appeals involved. This alternative is naturally suggested by the 
resolution of the imperial war conference of 1918 in favor of the appointment of 
an imperial investigation board. 

53. We have given careful consideration to the methods by which the findings 
of such a board might be made effective. There are two main alternatives— 
either the decision should become operative immediately it has been duly pro¬ 
mulgated by the board, having the eifect, for example, of adding a new com¬ 
modity to a schedule in the act of each part of the Empire, or the finding should 
be advisory and require to be adopted by the appropriate organ of the Govern¬ 
ment of each part of the Empire, as by order in council. 

54. Obviously, the former method would have the great advantage of securing 
(a) immediate uniformity, (?>) speed of decision, and (c) probably technical 
superiority, but we recognize that such a scheme raises constitutional questions 
which are beyond the scope of our terms of reference. This is a matter which 
we must, therefore, leave to higher authorities: but we think that the establish¬ 
ment of such a board is most desirable, even if it should be endowed only with 
advisory powers. 

55. Other functions of such an imperial body; further matters relating to bills 
of lading. —It is clear that the functions of the proposed board could not well 
be confined to the .specific task contemplated above, and we think it opportune 
to deal here briefly with two other matters which have come before us and led 
us on other grounds to contemplate the establishment of such a central body. 

56. The first of these matters is the question of the use of the phrase “ re¬ 
ceived for shipment” in bills of lading as an alternative to or in substitution 




THEFT, ETC., OF *EXPOET AND IMPORT SHIPMENTS. 425 


for the usual single word “ shipped/’ This question was brought before the 
committee by the Rubber Growers’ Association. As their complaint was against 
the practice in this matter of certain-named steamship companies in the Far 
Eastern trade, it was considered that the most appropriate course would be to 
endeavor to bring the parties together, with a view to their arriving at a 
mutually satisfactory solution. Accordingly, after correspondence with the 
shipping companies in question and the eastern exchange banks, a meeting was 
held on December 10, 1920, at which our chairman, Sir Halford Mackinder, pre¬ 
sided, and the Rubber Growers’ Association, the shipping companies, and the 
eastern exchange banks were severally represented. An account of the meeting, 
as agreed to by all concerned, is attached as Appendix III, from which it will be 
seen that the cause of difference was removed, at any rate for the time being, 
by an arrangement accepted by all parties. 

57. We have quoted these proceedings because they illustrate the possibilities 
of conciliation by an imperial body which is in continuous touch with shipping 
conditions and is charged with the function of investigating complaints. 

58. The other matter to which we have referred is of a more general char¬ 
acter. There is in certain quarters a demand for a model or uniform bill of 
lading. 

59. The evidence as yet taken by the committee on this subject has been gen¬ 
erally to the effect that widespread uniformity was impossible, owing to the 
varying conditions of particular trades, but that a very considerable degree of 
uniformity might be secured in each homogeneous trade. Reference may be 
made in this connection to the practice which is understood to obtain in France 
of registering the forms of shipping documents with the chambers of commerce, 
which in that country have a more or less official character. 

GO. We think that the prevalence of the demand for uniformity is due to the 
fact that bills of lading have been varied by shipowners without adequate 
notice and consultation with shippers in the various parts of the Empire. 

61. AVe hope that the general terms of the bills of lading will be increasingly 
settled by negotiations between associations or bodies representative of the 
general interests concerned, and the decision of the question of shipowners’ 
liability should render this more feasible. An example of what can be accom¬ 
plished on these lines is afforded by the work done within its own sphere by 
the documentary committee of the Chamber of Shipping of the United Kingdom. 
It is, however, the case that shipowners and shippers are frequently resident 
in different parts of the Empire, and we think it would be advisable that there 
should be an imperial body to which they may resort for purposes of conciliation. 

62. The completion of the further work involved in our terms of reference 
will doubtless give us additional experience of great value in connection with 
the functions of such a central body as has been referred to, and we propose 
devoting very careful consideration to its constitution and to the question of 
the other functions which might with advantage be assigned to it. 

63. It is obvious that it must be representative of the principal parts of the 
Empire and that it must include persons of expert knowledge. Provision may 
also have to be made for the holding of local inquiries by one or more of its 
members, perhaps with the assistance of local assessors. 

64. AVe have felt, however, that the question of shipowners’ liability under 
bills of lading is of such long standing, and gives rise in many quarters to so 
much feeling, that it was desirable to come to our conclusion in regard to it 
and to report them without delay. 

65. AVe desire to add that before our colleague, Sir Kenneth Anderson, left for 
Australia he agreed to the recommendation in regard to shipowners’ liability 
which is stated in paragraph 31. though the remainder of the report was not 
drafted in time for his signature. 

66. Finally, we must thank our secretary. Mr. E. J. Elliot, and his assistant, 
Mr. R. D. Fennelly, for their unwearying and skillful assistance in the prepara¬ 
tion of this report. 


H. J. Mackinder, Chairman. 
F. G. A. Butler. 

\A T . S. Meyer. 

H. Llewellyn Smith. 
George H. Perley. 

H. Larkin. 

J. Allen. 

Geo. Bowden. 

FerrUx\ry 25. 1921. 


Edgar R. Bowring. 
Alfred Booth. 

W. L. Hichens. 
Kenneth Lee. 

.Tames AA r . Murray. 

AV. J. Noble. 

E. J. Elliot, Secretary. 


426 


THEFT, ETC., OF EXPORT ANI) IMPORT SHIPMENTS. 

[Appendix I.] 


Summary of Evidence on the Limitation of Shipowners’ Liability by 

Clauses in Bills of Lading. 

I. SUMMARY OF EVIDENCE ON BEHALF OF SHIPPERS. 

Carriers' risks and navigation risks .—It will be convenient at the outset to 
indicate the limits of the question as it comes before the committee. Risks to 
property carried at sea arise from two classes of causes: (a) Perils of the sea, 
giving rise to what may be called navigation risks, and (b) want of care in 
handling, stowing, or keeping of goods. (R., 339-344. 1 ) It is the latter kind of 
risk that is chiefly in question. Further, overseas commerce involves transit 
over land to ship and from ship between the origin and final destination, and 
the shipowner now often performs shipping and forwarding agents’ work. 
(A., 150.) It is only that part of the whole act of transportation which apper¬ 
tains to the ship that is contemplated in what follows except where otherwise 
specifically stated. 

Responsibility and control .—Shippers and consignees contend that the natural 
and proper principle in this matter is that the shipowner and his servants are 
the only persons in a position to insure due care in the loading, custody, and 
unloading of the goods carried, and that in consequence the responsibility for 
such due care and the liability for any loss or damage occurring should fall 
upon the shipowner, who should not be allowed to contract himself out of his 
liability. (M., 1263, 1279.) 

Existing position under English law .—By the common law of England the 
shipowner as a common carrier is absolutely responsible for the safe carriage 
and delivery of the goods lie carries unless prevented by the act of God or the 
King’s enemies. This is, of course, subject to such statutory limitations as are 
imposed by the merchant shipping acts. Until a comparatively recent date, 
about 1885, it appears that shipowners and shippers were in agreement that it 
was the responsibility of the former to carry and deliver safely the goods in¬ 
trusted to them in respect of all causes of damage or loss which were or should 
be within their control, and that billls of lading, which were then largely drawn 
by agreement, did not contain the exemptions now complained of. (Memo¬ 
randum put in by Liverpool Chamber of Commerce.) (M., 1165, 1166.) 

It was and is, however, equally the position under British law that there is 
nothing to prevent a shipowner from exempting himself by special contract 
from liability for damage and loss of every kind and arising from every cause, 
and the shipowners began about 1885 to introduce into bills of lading exemption 
clauses of increasing comprehensiveness and stringency. (R., 233 et seq.) 
The reasons of this change are stated to have been the increasing combination 
among shipowners and the fact that the volume of the world’s trade had, on 
the whole, overtaken and kept ahead of the amount of shipping accommodation 
available for it. (Memorandum put in by Liverpool Chamber of Commerce.) 
Thus the shipowners, it is held, were placed in a position of advantage. Agreed 
bills of lading have been altered by them, and, although the practice of agree¬ 
ment between the parties still obtains to a certain extent, e. g., the Indian bills 
of lading of 1919 (M., 1209), it does not give either immediately satisfactory or 
lasting results from the shippers’ point of view. (M., 1164.) Shippers have 
in fact, it is contended, been faced by an interest possessing such a degree of 
monopoly that freedom of contract does not in reality exist. (R., 218.) 

Pilferage .—In recent years the question of shipowners’ liability has received 
additional importance from the great increase in pilferage which has occurred 
as an indirect effect of the war. It was stated that pilferage has increased 75 
per cent 2 since the outbreak of the war, and has become an organized and 


1 The references are to the numbers of the questions, and the following abbreviations 

are used to indicate the names of the witnesss: T.—Mr. E. B. Tredwen, London Chamber 
of Commerce. A.—Mr. J. W. Allen, J. P., Hull Chamber of Commerce. R —Mr J P 
Rudolf, Liverpool Chamber of Commerce, Liverpool and Glasgow Underwriters’ Associa¬ 
tions. N.—Sir Norman Hill, Bart., Liverpool Steamship Owners’ Association " H_ 

Mr. L. C. Harris, Chamber of Shipping of the United Kingdom. Nich—Mr E F 
Nicholls, Institute of London Underwriters. B.—Mr. S. A. Boulton, Lloyds’ Committee’ 
C.—Mr. F. H. Carey, London Assurance Corporation. M.—Mr. J. S McCon»chy Man¬ 
chester Association of Importers and Exporters. Ho.—Mr. R D Holt .T P Messrs 
Alfred Holt & Co., Liverpool. " CSS 

2 This would appear to be a very moderate estimate. In the Times Trade Supplement 
of November 20, 1920, figures for the monetary value of claims for pilferage were 
given, showing a risk from 1 shilling 44 pence per ton in 1913 to 26 shillings 91 nence 

in Tumi 1 Q9A 




THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 427 


wholesale practice. It is prevalent throughout all the carrying trades, and 
admitted not to he so great on ship or by shipowners’ servants as by stevedores, 
dockers, and others on shore. So serious did the losses become that in May, 
1920, English underwriters agreed among themselves to pay not more than 75 
Per cent of claims. (T., 39,•>40, 4G.) One witness stated that one reason for 
increased pilferage was that prior to this step on the part of the underwriters 
neither the cargo owner nor the shipowner really cared about the safe carriage 
of the cargo. (M., 1271.) 

Actual grievances .—Evidence as to the actual disabilities experienced by 
•cargo owners has been carefully sought. It is generally admitted that claims 
against shipowners in respect of loss of or damage to goods carried at sea, if 
reasonable, are met to a very considerable extent by the shipowner, though he 
is not legally liable owing to the terms of his bill of lading. One witness on 
behalf of the chambers of commerce said he had had no just claims refused, 
and that in his opinion and experience the shipowner puts in these “ clauses to 
protect himself from dishonest and unreasonable clients, but tlie reasonable, 
honest client is not prejudiced by them.” (T., 33.) 

Another witness, who spoke on behalf of both shippers and underwriters, 
though admitting that “ there are a very large number of responsible and 
reputable shipowners who, when they are dealing with important and regular 
clients, undoubtedly admit the claim, if reasonable,” stated that it is only with 
a minority of shippers that the shipowner will deal thus. (R., 224, 225.) 

The witness who appeared on behalf of the Manchester Exporters and Im¬ 
porters’ Association said that their experience is that once they go to the ship¬ 
owners in a friendly manner they can always get a settlement but the objection 
is to being in the position of having to accept these settlements as acts of grace. 
(M.. 1219.) 

Certain specific cases in which shippers had to submit to apparently harsh 
eond tions and others in which actual claims which seemed reasonable had been 
refused were adduced in evidence, and it. was stated that some of these were 
typical of numerous others. (R., 203, 210.) (See also under the summary of 
evidence on behalf of the underwriters.) 

Insurance. —It is the universal practice of shippers to cover themselves 
against loss of or damage to goods carried by sea by insurance. This is usually 
done under a “ warehouse to warehouse ” policy, which, as its name indicates, 
covers the whole transit and not merely that part of it effected by the ship. 
(T., 48.) The shipowner also covers with an underwriter or, more generally, 
with a mutual indemnity association any risks he may have, and it may hap¬ 
pen that there is overlapping, or double insurance of the same risk, very often 
to the advantage of the underwriter, who receives a premium while the ship¬ 
owner in practice takes tlie risk. (T., 78.) 

Complexity of bill of lading .—One of the minor points made against the pres¬ 
ent system is the great and increasing complexity of the actual form of bill of 
lading consisting of a large number of clauses printed in very small type and diffi¬ 
cult to interpret. (R., 218.) The evidence was against any attempt to introduce 
a uniform bill of lading for all trades, but that there should be common basic 
principles in the matter of liability. (R., 238, 314; M., 1177.) 

' Benefits under, existing legislation restraining tlie freedom of shipowner's to 
limit their liability .—One witness stated that he had experienced no advantage 
under any of the legislation of the Harter type. Complaints still arise from trans¬ 
actions under those acts, and the real meaning of the Australian sea carriage of 
goods act had never been tested, with the result that no one knew its real meaning 
and effect. (T., 26; T., 59-64; T., 123.) 

Attention was also drawn to the finding in the report of June, 1920, of the 
London Chamber of Commerce Committee that “ the experience of working under 
the Harter Act and the sea carriage of goods acts is that merchants are little 
better off ” for these acts. 

On the other hand, a practicing solicitor in Hull of considerable experience in 
such cases stated (in a written communication) that great improvement had fol¬ 
lowed the passing of the Harter Act. (Jackson: Appendix to Allen’s evidence.) 
Other witnesses stated that the act had been the means of avoiding much litiga¬ 
tion, and that there had been an absence of complaints. (M., 1230; R., 223.) 

Agreed or limited values .—It was pointed out that a development had occurred 
which threatened to rob the Harter Act of much of its efficacy; this was the 
practice, which had been held to be legal under the terms of the act, of stipulating 
an agreed value which may be very much below the real value of the goods. 
(R., 292.) The chief actuai complaint would appear to be to the effect that the 


428 


THEFT, ETC’., OF EXPORT ANT) IMPORT SHIPMENTS. 


rise in the value of commodities and in the level of freights has not been followed 
by a commensurate rise in the agreed values put in the bills of lading by the ship¬ 
owners. For example, the value of cotton was formerly stipulated at $100 a bale, 
a figure which has been raised to $150, but this is not regarded as a sufficient 
increase. (M., 1188-1190.) 

Complaint is also made in respect of the limitation of values inserted in bills 
of lading other than those under the Harter Act. For example, in the Indian 
bill of lading the maximum up to which the shipowner will pay in cases of loss 
or damage in respect of which he is prepared to admit liability at all is fixed at 
£100 per package only. It is contended that this should be raised in the same 
ratio as prices and freights have increased. 

In the case of the Australian and China lines an increase to £200 has in fact 
been made, but it is not regarded as sufficient. 

It was stated that there should be no difficulty in the ascertainment of the real 
and just value and thai this might be defined as the invo'ce value or the market 
value at the time of discharge. (M., 1200, 1201.) Sometimes where the consign¬ 
ment is to order there would be no invoice, and then the market value would have 
to be adopted, but the cargo owner contends that the shipowner should not have 
the option of choosing between the two values; the cargo owner desires to know* 
his precise position. (M., 128-1, 1232.) 

Merchants object to ad valorem freights chiefly because they are often un¬ 
reasonably high. (M.. 1245, 1246.) The witnesses made it quite clear that they 
are prepared to pay an additional charge in respect of the excess value of goods 
over a fixed limit of value to be agreed on, such charge being in the nature of 
an insurance premium. (M., 1254-1248: It., 292.) 

Having regard to the interpretations now placed on the Harter Act in this 
matter of agreed values and to the possibilities of evasion thereunder, the wit¬ 
nesses desire that in any legislation that may be introduced in the United King¬ 
dom or other part of the British Empire care should be taken to provide against 
any such evasion. The limit up to which the shipowners should be liable without 
additional charge should remain, but it should be at a reasonable level and not 
subject to arbitrary variation by the shipowner. 

General effect of transference of liability bach to shipowner; (a) on freights .— 
In regard to the economic consequences of compelling the shipowner to accept 
the liability opinion differed. One witness considered that the shipowner should 
be able to insure more cheaply because he had control of the risk. (M., 1246) ; 
another contemplated a considerable increase in freight, and that* in general the 
increase in freight would exceed the shippers’ previous payments to underwriters. 
(T., 87.) Still another witness was of opinion that there would be no material 
increase in freights, but this opinion appears t<> have been based mainly on the 
feeling that in the past there had been no reduction in freight when the ship¬ 
owner had obtained relief from liability by new clauses in his bill of lading. 
(R.. 263-267.) 

( b ) On care exercised by shipowners .—The fundamental question, however, is 
whether a real economic saving would be effected owing to greater care on the 
part of the shipowner and his servants and not merely a fresh allocation of bur¬ 
dens. 

It is admitted that shipowners are already going to very considerable trouble 
and expense in the endeavor to combat pilferage and that it is their practice to 
bear at any rate a large proportion of the losses from this and other causes; but 
witnesses thought they would probably be still more careful if the responsibility 
were fixed upon them. Instances were given where the present conditions were 
considered to be actually conductive to fraud. There is, for example, a short de¬ 
livery clause which provides that a signed statement by a ship’s officer shall be 
evidence of short delivery and evidence also that the short delivery arose from an 
excepted peril, though the statement need not specify the nature of the peril. 
(R., 244.) Shipowners may no doubt be expected to insure against these risks if 
placed upon them in their mutual associations, and it might be argued, therefore, 
that they would not. in fact, be more careful than at present. As against this, 
however, it was urged that the colleagues of a shipowner in such associations 
would soon become critical if his claims became excessive. (R., 262.) 

Practical difficulties of allocating responsibility for loss .—Considerable at¬ 
tention was given to the practical difficulty of determining where loss of, or 
damage to, goods, especially through pilferage, actually took place. The goods 
in passing from warehouse to warehouse via road, railway, dock, and ship are 
are necessarily in the possession and care of several different interest, and in 
determining the liability for pilferage it is necessary to make reasonably sure 





429 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


whole process of transportation at which the loss took place. 

or onini n h ie V ar ^° owners Nvll ° was chiefly examined on this subject was 
fL ™ tha t the last party in the chain of transport should be responsible 
, , v 1 ^ a the goods in good order and condition to their final destination, 

‘ f I<1 , a? 1< i sh ° 11 ^ obtain a clean receipt from the succeeding 

j*’ 1^0o-1306, 1309, 1317-1319.) Before such receipt was 

gnen all practicable precautions would naturally be taken to make sure that 
the goods are m good order and condition. It was admitted that the conditions 
undei which the loading and unloading of ships proceed are to-day such as to 
lender it impossible to examine thoroughly tlie goods on receipt either by the 
^ 01 ),X ( °, authorities or railway companies. In these circumstances the 

tuinsport authorities can only take what precautions are practicable. 

lie intention would be that claims for loss would in the first instance be 
against the last party delivering the goods, and there would be no presumption 
that the loss had occurred while the goods were on the ship or in the custody 
of the shipowner. 


Need for legislation rather than mutual agreement .—It is not denied that 
associations of merchants afford valuable means whereby their points of view 
may be brought effectively to the notice of shipowners and attention was di¬ 
rected to the opinion expressed in the report of the London Chamber of Com- 
mierce committee that a strong merchants’ committee in each trade is the best 
means for getting a redress of grievances. (T., 13.) It was held, however, by 
one witness that while procedure by bargaining between shippers’ and ship¬ 
owners associations easily met the case of bulk cargo shipments, it was not 
adequate for miscellaneous liner cargo. (R., 321.) He said that attempts had 
been made to agree bills of lading, but such agreed bills had not stood very 
long before alterations and new clauses had been introduced by the shipowner. 
(R., 346.) The same had been the experience on the Continent, though in the 
case of France standard bills of lading were filed with the chambers of com¬ 
merce and so obtained an official character. (R., 350.) 

There is no doubt that the merchant community in this country generally re¬ 
gards legislation as essential to secure that the shipowner undertakes liability 
as desired. (M., 1183, 1239.) The witness from the Manchester Association 
thought that legislation would be necessary, but he also thought ( a ) that it 
ought to be possible to fix bills of lading by agreement betw r een representative 
bodies of shippers and shipowners (M., 1233-1236), and (b) that shippers 
would accept some such system provided that the agreed bills of lading should 
be registered with some official or semiofficial body, and not be alterable arbi¬ 
trarily or without due notice. (M., 1206-1211.) 


II. SUMMARY OK EVIDENCE ON BEHALF OF THE SHIPOWNERS. 

Freedom of contract .—The shipowner puts at the outset the desirability of 
freedom of contract, contending that the interests of all parties are thereby best 
secured. (N., 363-364, 418-422.) It was argued that a monopoly or quasi 
monopoly did not exist in the case of shipping as shipowners could not prevent 
freights falling; it was admitted that a nearer approach to such a state of 
affairs obtained in the Australian trade than in other trades, but this was 
attributed to the fact that the restrictive legislation of the Commonwealth had 
had the effect of keeping tramp shipping away from the trade. There is noth¬ 
ing to prevent outside shipowners from competing by offering better conditions 
to shippers (N., 414), and there is no dictation, e. g., from.the London and 
Liverpool Protective Association as to the conditions which steamship owners 
may put into their bills of lading except that there must be a clause exempting 
them from liability for loss due to negligent navigation. (N., 385, 391.) 

The compelling powder on the shipowner to make him give reasonable condi¬ 
tions in regard to the carriage of goods is the necessity of maintaining the repu¬ 
tation of his line and of giving satisfaction to his Customer. The reputable 
and far owner gets much better support. One witness stated that the ship- 
owner who is careful to avoid loss and damage to his cargo has the advantage 
that more favorable rates of insurance are quoted by the underwriter to the 
shipper on goods shipped in his steamers than on those shipped by competitive 
steamers w r hose owners do not enjoy so good a reputation in this respect. (N., 
380, 284; Ho., 1404, 1411.) 

Though the shipowners would appear to take no exception to the account of 
the development of the present situation put forward on behalf of the shippers 
it is claimed as an example of the good arrangements obtained under a free 


430 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

I 

regime that the Harter Act was based on a form of bill of lading negotiated 
some 10 years previously by the Liverpool Steamship Owners’ Association with 
the New York Produce Exchange. (N., 385; H., 584.) 

The explanation given of the undoubted change in the nature of the bill of 
lading is that the complexity of ocean trade has increased enormously, and that 
to protect himself against unfair claims on the part of unreasonable shippers or 
consignees or ingenious underwriters the shipowner has been obliged to insert 
numerous clauses in the bill of lading. (Harris; Memo.) 

Actual position of shipper in practice .—The shipowner contends that steam¬ 
ship lines very generally recognize pilferage claims; though it was admitted 
by Sir N. Hill that “ sometimes questions arise as to stowage.” It was ad¬ 
mitted that there might be a tendency to treat the small trader unfairly, but on 
the other hand, it was strongly contended that the modern development of liner 
services had conferred essential advantages on the small shipper. (N., 434-435 r 
445-446.549; H., 580, 609.) Mr. Holt, who took up the position that practically 
every loss was due to negligence, said that though he would not necessarily pay 
a claim if he was satisfied that the loss was due to negligence, he recognized that 
there were cases in which the shipowner ought to pay; the general motive in 
paying claims outside the legal liability would appear to be a desire to preserve- 
an atmosphere of good will. (Ho., 1388, 1394.) 

Complexity .—As regards the complaint against the modern bill of lading on 
the score of its complexity it was stated that the underwriter does not really 
want to know the terms of the bill; what he does want to know is the name of 
the line which issues the bill (H., 571-574) ; it is upon the reputation of this 
line that he bases his rate of premium (see above under “Freedom of con¬ 
tract”). It is stated that the claims clerks of the underwriters should be per¬ 
fectly familiar with the terms of bills of lading as they naturally have to ex¬ 
amine them carefully when claims from their clients are received. (N., 400.) 

Uniform bills of lading would be quite impracticable. (H. Memo.) It was 
urged that it must be within the power of the shipowner to vary the clauses of 
his bill readily ; elasticity is essential, and the settlement of clauses by agreement 
(even among shipowners themselves) was not regarded, by one witness at any 
rate, as feasible. (H., 634-636.) The bills in use do, however, agree on funda¬ 
mentals. (H., 646-648.) 

Existing legislation .—Sir Norman Hill gave evidence as to one important 
difference between the provisions of the Harter Act, 1893, and the Australian 
sea carriage of goods act, 1904. The former provides that if the shipowner 
“ shall exercise due diligence to make the said vessel in all respects seaworthy 
and properly manned, equipped, and supplied,” then he is absolved from re¬ 
sponsibility for damage or loss resulting from faults or errors in navigation, 
from dangers of the sea and from other definite causes generally beyond his 
control. The Australian act provides, on the other hand, that in every bill of 
lading a warranty shall be implied that the ship shall be at the beginning of 
the voyage seaworthy in all respects and properly manned, equipped, and sup¬ 
plied, and it is not enough for the shipowner to exercise due diligence to secure 
exemption from liability for loss and damage arising from causes of the same 
kind as those referred to above. (N., 471-473.) 

This distinction, thought theoretically important, does not appear to have had 
much practical effect. The Australian act is not clearly consistent with itself 
and the exact legal position has never been tested. It was stated that ship¬ 
owners had not yet accepted the Austrian sea carriage of goods act as consti¬ 
tutional. (Ho., 1330, 1385.) 

Moreover, the particular difference here in question is not directly concerned 
with risks of damage and loss due to careless handling, stowage, and custody, 
though it might lihve the effect of bringing within the responsibility of the 
shipowner some risks whch, on practcal and fair grounds, ought to be excluded. 

It was stated that the passing of the Harter Act had not made any prac¬ 
tical difference to shipowners, and probably not a single policy of insurance had 
been dropped because of it, nor had any reduction of premiums occurred. It 
was doubted by one witness whether his firm had paid, under the Harter Act 
or the Australian act, any claim which they would not have paid but for those 
acts. (N., 410, 469, 555; H„ 582; Ho., 1381, 1388.) 

The Australian act was strongly condemned in respect of the features ex¬ 
plained above, and was stated to have had the effect, coupled with other legis¬ 
lation, of putting up freights to and from Australia. (N., 470, 472, 477; Ho., 
1331.) At the same time it was admitted that the terms of the act had been 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 431 

adopted in the outward bill of lading from the United Kingdom to Australia 
by most lines without an increase in freight. (Ho., 1387, 1434.) 

The Canadian legislation on the same subject was subjected to similar 
strictures, but the terms of the 1910 act appear to be much more close to 
those of the Harter Act than to those of the Australian act. (N., 481, 523-524.) 

Shipowners’ difficulties. —The clause in the home bill of lading, which protects 
the shipowner against pilferage claims, was put in largely because it is so 
difficult to prove or ascertain where the loss takes place, and it would manifestly 
be unfair to saddle the ship with the responsibility for losses which take place 
before the goods reach the ship, or subsequently to their delivery over the 
ship’s side. (N., 417, 437-439.) Sir Norman Hill did not think there would 
be any objection to a provision to the effect that if it can be established that 
the pilferage took place, owing to the negligence of the shipping company’s 
servants, the company should be liable. (N., 440.) But the biggest difficulties 
are those attending delivery. Most of the additions to the modern bill of 
lading consists of provisions relating to what happens at the end of the voyage. 
(N., 558-562; H., 650.) The shipowner wishes to end his responsibility for the 
goods at the ship’s rail, or as soon as the goods leave the ship’s tackle. There 
are, however, foreign ports, where the shipowner is in practice, unable prop¬ 
erly to control even the actual discharge of the cargo. (H., 577.) Particular 
examples of fraudulent dealing and conspiracy at far eastern ports, against 
which the shipowner may have to seek protection, were given. (Ho., 1458.) 

It had to be borne in mind, too, that shipowners in certain cases were also 
warehouse keepers, and that if they were no longer free in regard to their 
liability care would have to be taken to distinguish their liability as shipowner 
from that as warehouse keeper. (Ho., 1351.) 

Agreed or limited values. —Interesting evidence was given by Mr. Holt in re¬ 
gard to the problem of the maximum limit of value to be attached to goods in 
respect of liability. His object was to get the shippers to declare the value 
of their goods at shipment when above a certain prescribed limit, so as to secure 
that these valuable goods should be specially stowed and watched; and he con¬ 
tended that if the shipper did not so declare valuable goods he was facilitating 
pilferage or theft and so should have no remedy against the shipowner. If, 
however, the value of the goods was duly declared, the shipowner would accept 
liability (where not otherwise excluded) up to a maximum in this particular 
case of £200, and on payment by the shipper of an extra sum of 5s. per ton, up 
to £400, as the shipowner would take the special care indicated and so help to 
reduce pilferage to a minimum. (Ho., 1346-1349, 1441, 1442, 1451.) 

Effect of proposed change in incidence of liability; (a) on insurance prac¬ 
tice. —The witnesses appearing on behalf of the shipowners were of opinion that 
the cost of insurance of the risks in question with the shipowner would in all 
probability be greater than the present cost of insurance with the underwriter. 
(N., 456-459.) Moreover, the proposed legislation would give the cargo owner 
merely a claim against the shipowner, and such a claim would not give the same 
security as the present policy of insurance; the value of a cargo to-day is very 
many times the value of the ship. (N„ 468, Sir N. Hill’s Memo. secs. 3-5; Ho., 
140l!) The shipowner would insure by means of mutual clubs. (N., 461.) 

It was held that the banks would probably demand adequate insurance against 
failure of shipowners to pay claims if the shippers were to get legislation re¬ 
quiring the shipowner to guarantee safe delivery. (Sir N. Hill’s Memo. secs. 
15, 16; Ho., 1400.) As mentioned above, the Harter Act had not, in fact, en¬ 
abled cargo owners to drop insurance. 

The opinion was expressed that the businesses of “ carrying ” and of “ insur¬ 
ance ” should be kept distinct. The big shipping companies could do the latter 
as well, but the smaller ones would suffer. 

(h) Foreign competition. —In this connection considerations of foreign com¬ 
petition are important. If two countries, the one (A) having the liability fixed 
on the shipowner and the other (B) leaving him free, are competing in the ex¬ 
port of goods to a third country, the shipowner in (B), ceteris paribus, may 
be able to quote a lower freight than bis competitor in (A), and one witness on 
behalf of the shippers agreed that the lower freight would outweigh with the 
importer the better conditions of the bill of lading. (T., 90, 99.) Anotliei such 
witness contended that the fairer bill of lading would get the business. Evi¬ 
dently the comparison is very hypothetical. Undoubtedly the shippers may be 
taken as desiring that the effect of foreign competition should be fully con¬ 
sidered before legislation is undertaken. 


432 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


(c) On cure of cargo .—It was not admitted, at any rate in the case of the 
lines, that the fixing of the liability on tiie shipowner would insure greater care. 
(N., 382-384; Ho., 1404.) It was pointed out that the real force actuating the 
shipowner was his need to give satisfaction in his services, and that, in fact, he 
does pay a major.ty of the claims. (See above under “ Freedom of contract,”) 

Legislation or agreement .—Apart from the intrinsic merits or demerits of 
the measures suggested, the shipowners’ representatives were much opposed to 
the idea of achieving those measures by legislation. On the other hand, ship¬ 
owners would always he ready to meet and discuss matters with the shippers; 
“ the difficulty is to get really representative people who will speak for the ship¬ 
pers ” ; but shipowners should not be the only parties who can combine. (Mr. 
Harris’s Memo., p. 5; H., 600-604; N., 424, 539-547.) The method of nego¬ 
tiation has been successfully employed in settling charter parties ; its application 
to the business of general shipments appears inherently more difficult, and the 
casual shipper who wants the lower freight offered by owners outside the 
conference is blamed as the cause of departures from agreed or quasi-standard 
forms of bills of lading. (H., 653-656.) Mr. Harris was inclined to represent 
the shipowners as better able to settle bills of lading to everybody’s advantage 
by reason of their extensive knowledge of the difficulties involved. (H., 627- 
630.) Mr. Holt said that he had had no difference with any important mer¬ 
chant as to the terms of the bills of lading (Ho., 1320), and that those who con¬ 
tribute the bulk of the cargo are quite as powerful as he was as shipowner, and 
a combination of two or three of them could obtain very favorable terms. (Ho., 
1367.) At the same time he admitted that he never discussed a new clause with 
the merchants and that it was fair to say that the bulk of such clauses were in¬ 
serted without notice. (Ho., 1445-1446.) 

Sir Norman Hill said frankly that he thought the shipowners should he 
relieved from being judges in their own cause, i. e., in relation to pilferage 
claims, and, as already mentioned, he did not see any objection to the ship¬ 
owner being made liable for his servant’s negligence in that connection. (N... 
442-448.) He agreed that this might do good and would probably do no harm. 
His personal opinion in regard to legislation in this country on the lines of the 
Harter Act was that “ it would be of some advantage to cargo owners,” subject 
to provision being made for owner’s risk rates of freight; and that “it would 
not do very much harm to reasonable shipowners.” The consequences would 
not be considerable either way. (N., 566-8.) 

Sir N. Hill attached much importance to the provision of owner’s risk rates 
to cover the case of new and unknown risks. (Sir N. Hill’s Memorandum, s. 
21.) He has pointed out that the cargo owner had reasonably been required to 
take the risk of the carriage of refrigerated produce in the early stages of 
that traffic. Such developments in the future might be checked if hard and 
fast obligations were put on the shipowners, though eventually the risks in¬ 
volved would become no more difficult to deal with than those of ordinary sea 
carriage. (Addendum to N., 566.) 

III. SUMMARY OF EVIDENCE ON BEHALF OF THE UNDERWRITERS. 

Responsibility and control .—That the power of control should carry with 
it responsibility for loss in order to secure the minimum of loss is the essential 
principle involved according to the underwriter. The loss through short deliv¬ 
ery, theft, and pilferage is very heavy; rates of premium are as much as 2 and 
3 per cent; and in regard to certain articles, such as boots and shoes, the risk, 
is certainly not less than 10 per cent. (R., 243; Nicli., 670-680; C., 1129) ; and 
there has to be added to that the cost of litigation and the hostility engendered 
between the interests concerned. (B., 854, 872.) 

It is contended that the proposed change in the incidence of the liability 
would be the means of effecting a considerable improvement. (Nich. Memoran¬ 
dum, s. 6.) It was advanced by one witness that the bill of lading conditions 
of to-day aggravated the evil of pilferage. (B., 870.) Another witness held 
that the clause repudiating liability for pilferage was not of recent insertion, 
but that it had become more common for shipowners to take strict advantage of 
it. (C., 1109, 1110.) It was stated that the clause, which has been mentioned 
before as much objected to by shippers, to the effect that a sworn statement by a 
shipowner’s servant shall be conclusive evidence that the goods have been stolen 
or pilfered, had been adopted by the shipowners as a consequence of the heavi¬ 
ness of pilferage claims against them. (B., 860-864.) It was asked whether any 
legal proceedings had been taken to see whether judges would hold this clause 
to be reasonable, but apparently this has not been done. (B., 865-866.) 


SHIPMENTS. 433 


THEFT, ETC., 


OF EXPORT AND IMPORT 


for 

ni 


sons to emere-p and ^ f L . 11 takes a long time for compari- 

is to emerge, and tliat in regard to marine insurance in Dartieninr r p«nn-« 
aie slow to show themselves. (Nich., 782-783 802) ’ I articular, results 

Marine risks .—The underwriters made it quite clear that thev did not 
'i any greater stringency upon the shipowner in respect of navigation or 
arme risks, which could easily be kept separate from the risks of handling 
and custody of goods. (Nich. Memorandum, §5.) Indeed one of the witnesses 
pwn lhC ? Uy St 5 t0S legislation is required in this country to relieve the ship 
o nti Horn the absolute warranty of seaworthiness implied by common law 
ut to impose the obligation to use due diligence*by himself and his agents to 
make and keep the ship seaworthy. At present the shipowner can in this 
country contract himself out of the necessity for the warranty, and also out of 
that for exercising due diligence. Only under Australian legislation is there a 
statutory requirement of a warranty of seaworthiness. 

Pilferage— It emerges from the underwriters’, as from the shippers’, evidence 
tnat the mam trouble at present is pilferage and the difficulty of determining 
iiop F r “tVII 10 whole chain of transport that pilferage takes place. (C., 1111- 
- 1 uteiage and theft, also bad stowage, misdelivery and nondelivery, are 

not risks covered by the ordinary policy of insurance taken out by shippers, 
but are usually insured under a separate policy. (B.. 893, 915.) One witness 
went so far as to say that the shipowner should not be liable for theft (implying 
violence) and pilferage unless they resulted from lack of due diligence on his 
part; but that nondelivery and short delivery are shipowners’ risks and should 
not be deemed to be due to theft or pilferage without due proof. (Nich., (194, 
818.) 


English underwriters in recently agreeing to pay up to 75 per cent only of 
the claims made under pilferage policies are thereby endeavoring to induce the 
shipper to take greater care in packing. (Nich., 799) In France it was stated 
the underwriter stipulates that he will only take 90 per cent of the theft and 
pilferage risk, and apparently the shipowner has to take the remaining 10 per 
cent. (Nich., 810.) 

The underwriter recognizes the difficulty of determining the point at which 
pilferage (or other loss or damage) has taken place, and he asks only that the 
shipowner should be responsible for the goods while actually in his possession. 
(C.. 1111-1126; Nich., 687-694.) It is admitted that the proportion of pilferage 
on land must be much greater than during carriage at sea, but typical examples 
of short delivery were cited, in which there must to all appearances have been 
connivance by the personnel of the ship. (Nich., 675, 742-743, 766-767; C, 
1041, 1083.) The question where the loss occurred in each case would have 
to be determined by the available circumstantial evidence. (C., 1133.) 

With regard to representations to the effect that the ship’s officers have in 
practice very little power to control stowage and discharge in certain foreign 
ports, and also that certain port authorities, e. g., the Manchester Ship Canal 
Co., require the control of the ship to be given up to them while in dock, at 
the ship’s risk, it was admitted that it would be unreasonable to fix upon the 
shipowner responsibility for what is not under his control. It was a limited 
class of case. (Nich., 788-793.) 

Actual grievances .—The committee have naturally sought to obtain particulars 
of concrete instances in which the present practice has led to undoubted hard¬ 
ship, but the volume of such cases which the witnesses have been able to adduce 
is not large. Mr. Carey, claims adjuster, gave particulars of three cases in 
which the shipowner repudiated liability on the strength of the bill of lading 
clauses, though he would appear to have been equitably responsible: 

(a) A case of wrong delivery due solely to the shipowner’s servant’s error, in 
which the shipowner offered only the limited value. (C., 1033.) 

(&) A case of nondelivery on a voyage from Liverpool to Genoa, in which 
the shipowner refused to accept liability or to pay any compensation on the 
strength of a clause exempting him from liability for any loss capable of being 
covered by insurance. (C., 1041.) 

(c) Another case of nondelivery on a voyage from Liverpool to Naples in¬ 
volving £1,000, in which the shipowner contended that the loss was due to theft, 
and so a matter for the underwriter. (C., 1083.) 


60683—21-28 



434 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


While admitting that many claims are paid by shipowners, though excluded 
by clauses, underwriters state that an important body of shipowners do not 
reasonably meet claims, and that they none the less do not charge any lower 
freights. (B., 897-902.) 

The claims refused by shipowners are generally in respect of nondelivery and 
pilferage. (C., 1098.) The shipper may be in the undesirable position that he 
is unable to pursue his claim against the shipowner, who has contracted himself 
out, or against the underwriter, who is not willing to insure every risk. An 
appreciable liability remains for the shipper; it is made up, it would appear, 
of 25 per cent of the pilferage risk, of inherent vice of goods, and of certain 
other definite risks and of any unknown ones. But the underwriter, like the 
shipowner, may pay where he is not strictly liable. (B., 942-947, 958-961; C., 
1055-1061.) 

One of the complaints of the shipper is that under present bills of lading he 
is not given a reasonable time within which to make his claim. 

The underwriters affirm that it is quite impracticable for them to acquaint 
themselves with the terms of the hills of lading against which they are issuing 
policies (Nich., 784) ; in making the usual contracts for long periods there is 
nothing to protect them against changes in the clauses. (Nich., 698-700.) 
As underwriters in practice are unable to scrutinize bills of lading, their 
liabilities are unknown, and there must therefore be a tendency to charge a 
premium to cover the most extensive liabilities: in other words, to double 
insurance. (R., 219, 325; B., 887-890; C., 1051.) 

Sometimes notice is given of change in bills of lading, but the rule is not 
to give notice, and that is a cause of dissatisfaction. (Nich., 815-816; B., 
896.) Uniform bills of lading would not be practicable, but they should have in 
common certain fundamental characteristics fixed by agreement or legislation. 
(Nich., 707.) 

Benefits under existing legislation .—Evidence as to shipments from the United 
States to South Africa and from the United States to the United Kingdom 
appears to establish the fact that the conditions in South African harbors are 
very much better than in those of the United Kingdom, since the former traffic 
is not nearly so badly affected by short delivery, theft, and pilferage. (Nich., 
728, 745-748.) 

Evidence given by Mr. Carey, an adjuster of claims, tended to show that the 
clause paramount applying the Harter act conditions was ignored by ship¬ 
owners in South Africa, and that this was because shippers and underwriters 
have for reasons of cost, not as yet contested the matter in the union courts. 
However, the majority of shipowners trading from the United States to South 
Africa did not seek to repudiate liability, and the proportion of losses on those 
lines was very much less than on certain British lines in the same trade who 
ignored the Harter Act and added to their bills of lading a clause repudiating 
liability for pilferage. (C., 1004-1029.) Other examples of the indirect effect 
of the Harter Act were given, and it was advanced that the small proportion of 
claims for pilferage on imports into Canada from this country was an effect of 
the general care exercised by shipowners in the Canadian-United Kingdom trade 
in consequence of the Canadian legislation on the subject. (C., 1100.) 

It was confirmed that the position under the Australian act remained uncer¬ 
tain. 

Value diffieultg. —It was agreed that the shipowner should be allowed to limit 
his liability as to value, and that he should in the case of the more valuable goods 
make in addition to his charge for carriage a charge in the nature of insurance. 
(Nich., 681, 758-760.) 

Effect of proposed legislation .—It was admitted that the present practice, by 
throwing all the risks on the shipper, and through him on the underwriter, made 
for simplicity. It was also admitted that if the shipowner had to take the latter 
risks the shipper would only get a claim instead of an indemnity, and, further, 
that it was possible that the underwriter could insure with a narrower margin 
than the shipowner, though it was thought that competition between shipowners 
would bring the premiums down to the proper economic level. The main conten¬ 
tion of the underwriter seemed to be that the shipper would still insure, at least 
for some years to come, with the underwriter, but that, owing to the increased 
care taken by the shipowner, the rates of premiums would fall. (Nich., 711-712, 
768-777, 820-823.) 

As regards competition with other countries, the determining factor would be 
freight and not conditions. (Nich., 719.) 






THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


435 


Legislation or agreement. The underwriters held that the present questions 
could best be dealt with by agreement between liner conferences and merchant 
associations, though it was admitted that it was more difficult for the latter than 
for the former to get together. (It., 870-880: Nidi., 703.) Earlier attempts had 
tailed by reason of the fact that shipowners amended agreed bills of lading. 

One witness was strongly of opinion that it would be better to secure greater 
elasticity by giving the board of trade power to approve clauses or bills of lad¬ 
ing which were in conformity with general principles laid down by law. (B., 
883-885, 914, 936-940. and subsequent letter of Nov. 11. 1920.) 


[Appendix ii.] 


Memorandum on the Existing Legislation in the Dominions on the Subject 

of Shipowners’ Liability. 

The latest Dominions legislation against the limitation of shipbuilders’ lia¬ 
bility by clauses in bills of lading is the water carriage of goods act, 1910, of 
Canada, and it is proposed below to state its chief provisions and, by comparison 
with them, those of the corresponding acts in Australia and New Zealand, and of 
the United States Harter Act, 1893. 

(A) 1. The main operative provision of the Canadian act is section 4, which 
is as follows: 

“ Where any bill of lading or similar document of title to goods contains any 
clause, covenant, or agreement whereby— 

“(u) Tlie owner, charterer, master, or agent of any ship, or the ship itself, is 
relieved from liability for loss or damage to goods arising from negligence, fault, 
or failure in the proper loading, stowage, custody, care, or delivery of goods 
received by them or any of them to be carried in or by the ship; or 

“(b) Any obligations of the owner or charterer of any ship to exercise due 
diligence to properly man, equip, and supply the ship, and make and keep the 
ship seaworthy, and make and keep the ship’s hold, refrigerating and cool 
chambers, and all other parts of the ship in which goods are carried, fit and 
safe for their reception, carriage, and preservation, are in anywise lessened, 
weakened, or avoided; or 

“(c) the obligations of the master, officers, agents, or servants of any ship to 
earefuly handle and stow goods and to care for, preserve, and properly deliver 
them are in anywise lessened, weakened, or avoided; 

such clause, covenant, or agreement shall be illegal, null, and void and of no 
effect unless such clause, covenant, or agreement is in accordance with the other 
provisions of this act.” 

2. It will be seen that this section deals with two matters, viz, (1) liability for 
loss or damage to goods in the course of their loading, stowage, care, and de¬ 
livery [subsection (a)], with which may be associated [subsection (c)] the 
obligations of the master, officers, agents, and servants of the ship to exercise 
care in the handling, stowing, custody, and delivery of the goods; and (2) the 
obligations of the owner or charterer of the ship “ to exercise due diligence” in 
the manning, equipment, condition, and seaworthiness of the ship [subsec¬ 
tion (&)]. 

3. To the above section corresponds section 5 of the sea carriage of goods act, 

1904, of Australia. The two sections are to a large extent identical in. terms, 

the chief differences being (i) that in subsection (a) of the Australian act there 
is included among the sources of loss or damage “ harmful or improper condition 
of the ship’s hold or any other part of the ship in which goods are carried.” At 
the same time it should be pointed out that in both acts there is in subsection (b) 
a preservation of the obligations in respect of making and keeping “ the ship’s 
hold, refrigerating and cool chambers, and all other parts of the ship in which 
goods are carried fit and safe for their reception, carriage, and preservation.” 
(As to the exact effect of this in the Australian act see (ii) below.) 

(ii) In subsection ( b) in section 5 of the Australian act dealing with what 

we may refer to as “ seaworthiness,” there is a difference in wording which, 

though slight in itself, might, it seems, have important effects ; instead of reading, 
as in the Canadian act, “obligations * * * to exercise due diligence to 

properly man, etc., etc.,” it runs “ obligations * * * to exercise due dili¬ 

gence and to properly man, etc., etc.,” so that the Australian enactment would 
appear to effect the preservation of a general obligation to exercise due diligence 



436 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 

<iiid of a specific* obligation to properly man tlie ship, to make and keep the ship 
seaworthy and to carry out the other duties enumerated. The Canadian act 
seeks to impose only the exercise of due diligence in respect of the specifically 
enumerated duties. The whole bearing of the Australian act on the question of 
seaworthiness will have to be considered further, however, in connection with sec¬ 
tion 8 of that act, corresponding to sections 6 and 7 of the Canadian act, as to 
which see below. 

The Harter Act, section 2, resembles the Australian act in that its words are 
“ to exercise due diligence, properly equip, etc.,” but this may have been inad¬ 
vertent, as the wording of section 3 is “ to exercise due diligence to make the said 
vessel, etc., etc.” 

4. Section 300 (1) of the New Zealand shipping and seamen act, 1903, corre¬ 
sponds to the sections dealt with above; the chief differences between its provi¬ 
sions and those of the Canadian act are: 

(i) The inclusion in paragraph (a) of the “harmful or improper condition of 
the ship's hold ” among the sources of loss or damage in respect of which the ship¬ 
owners' liability is to be preserved. 

(ii) On the other hand, in paragraph (b) there is no specific reference to 
“ refrigerating and cool chambers ”; the obligation is only, in this respect, to 
exercise due diligence to make the hold of the ship fit and safe for the reception 
of cargo; its carriage and preservation not being included. 

(iii) Similarly, the obligation in respect of seaworthiness proper is to make 
the ship seaworthy and not, as in the acts dealt with above, to make and keep her 
seaworthy, but there are the additional words after “ seaworthy “ and capable of 
performing her intended voyage”; in the New Zealand act there would thus 
appear to be no continuing obligation in this respect. 

(iv) A very important difference in the New Zealand provision is the qualifi¬ 
cation to the effect that clauses shall be null and void “ unless the court before 
which any question relating thereto is tried shall adjudge the same to be just and 
reasonable.” 

5. The Harter Act agrees with the New Zealand act in regard to point (iii) 
above, and moreover it does not contain any reference to an obligation to make 
or keep the ship’s hold or refrigerating chambers or other parts of the ship fit 
and safe. As we have already seen at 3 (ii) above, it differs from the Canadian 
act also in regard to form of the obligations as to seaworthiness. 

6. On the whole, there would appear to be no feature of vital importance 
which this main provision of the Canadian act lacks and which the other acts 
contain. 

(B) 1. Section 4 of the Canadian act, as we have seen, deals with the liability 
and obligations of the shipowner, master, servants, and agents in respect of cargo 
and of “ seaworthiness,” and in respect of the latter the obligations are confined 
to the exercise of due diligence in regard to certain specifically enumerated 
matters. 

Section 6 removes from the shipowner liability in respect of loss or damage 
resulting from: 

(a) Faults or errors in navigation; 

( b ) Faults or errors in the management of the ship; 

(c) Latent defect. 

provided due diligence in certain respects has been exercised. 

Its precise terms are as follows: 

“ If the owner of any ship transporting merchandise or property from any port 
in Canada exercises due diligence to make the ship in all respects seaworthy and 
properly manned, equipped, and supplied, neither the ship nor the owner, agent, 
or charterer shall become or be held responsible for loss or damage resulting from 
faults or errors in navigation or the management of the ship, or from latent 
defect.” 

2. In the Australian act there is no specific provision for exemption from 
liability in respect of faults or errors in the management of the ship or of latent . 
defect. The provision in respect of “ faults or errors in navigation ” is con¬ 
tained in section 8, which is as follows: 

“8. (1) In every bill of lading with respect to goods a warrant shall be im¬ 
plied that the ship shall be, at the beginning of the voyage, seaworthy in all 
respects and properly manned, equipped, and supplied. 

“ (2) In every bill of lading with respect to goods, unless the contrary intention 
appears, a clause shall be implied whereby, if the ship is at the beginning of the 
voyage seaworthy in all respects and properly manned, equipped, and supplied, 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 437 


neither the ship nor. her owner, master, agent, or charterer shall be responsible 
tor damage to or loss of the goods resulting from— 

“(«) Faults or errors in navigation; or” 

(and there follow other items (?>) — (/), as to which see (C) below). 

■ . ' ^ oll hl thus appeal that under the Australian act the shipowner gets a 
relief in respect only of what may be taken to be the main category of the three 
enumerated in the Canadian act, and then only provided the ship is actually at 
the beginning of the voyage “seaworthy in all respect and properly manned, 
equipped, and supplied,” irrespective, for example, of latent defect. 

4 It has further to be remarked, however, (1) that, on the one hand, the force 
ot the words “unless the contrary intention appears” would appear to be to 
leave it free to the parties to agree that the shipowner shall be responsible for 
the classes of loss in question, and (2) that, on the other hand, this is a minimum 
measure of protection for the shipowner and that there is nothing to prevent him 
contracting out of liability for faults or errors in management or for latent de¬ 
fect so long as the bill of lading contains nothing contrarv to section 5 or sec¬ 
tion 8(1). 


5. The New Zealand law on this matter is contained in section 293 of the ship¬ 
ping and seamen act, 1908. It is in practically the same terms as the Canadian 
section (6), except that it does not refer to “ latent defect.” 

0. Section 3 (first part) of the United States Harter Act is the same as section 
0 of the Canadian act, except that it does not refer to “ latent defect.” 

(C) l. In addition to the provision of section 6 of the Canadian act for a 
conditional exemption from liability in respect of faults or errors in navigation 
or in the management of the ship or from latent defect, there is by! section T 
unconditional exemption in respect of a number of causes of loss such as fire, 
acts of God, deviation. The section is as follows: 


“ the owner, charterer, agent, or master shall not be held liable for 

loss arising from fire, dangers of the sea or other navigable waters, acts of God 
or pubi c enemies, or inherent defect, quality, or vice of the thing carried, or from 
insufficiency of package, or seizure under legal process, or for loss resulting from 
any act or omission of the shipper or owner of the goods, his agent, or representa¬ 
tive. or from saving or attempting to save life or property at sea, or from any 
deviation in rendering such service, or other reasonable deviation, or from 
strikes, or for loss arising without their actual fault or privity, or without the 
fault or neglect of their agents, servants, or employees.” 

2. Section 8 (2) of the Australian act contains, in addition to faults or errors 
in navigation, a similar list, viz: 

(b) Perils of the sea or navigable waters ; or 

(c) Acts of God or the King’s enemies; or 

(cl) The inherent defect, quality, or vice of the goods; or 

(e) The insufficiency of packing of the goods; or 

(f) The seizure of the goods under legal process; or 

((/) Any act of omission of the shipper or owners of the goods, his agent, or 
representative; or 

(li) Saving or attempting to save life or property at sea ; or 

(i) Any deviation in saving or attempting to save life or property at sea. 

The exemption hereby granted of the shipowner from liability in respect of 
damage to or loss of goods resulting from these causes is conditioned by the ship 
being “ seaworthy ” at the beginning of the voyage; but as indicated at section 
(B) 4 above, the exact force of section 8 is far from clear. It may, for example, 
be open to the shipowner to contract out of his liability for fire, strikes, or other 
similar causes not embraced in the list, provided always the provisions of the 
rest of the act are not infringed. 

3. In both the New Zealand act (latter part of section 293) and the Harter Act 
the list of exemptions does not contain fires, strikes, “ reasonable deviation,” or 
the final general phrase of the Canadian section, “ or for loss arising without their 
actual privity or without the fault or neglect of their agents, servants, or em¬ 
ployees.” Moreover, the exemptions are conditional upon the exercise of due dili¬ 
gence to make the vessel seaworthy. 

4. In this connection it is pertinent to note the terms of section 502 of the mer¬ 
chant shipping act, 1894, as to the exemption of the shipowner from liability in 
respect of fire, the relevant portion of the section is as follows: 

502. The owner of a British seagoing ship, or any share therein, shall not be 
liable to make good to any extent whatever any loss or damage happening with¬ 
out his actual fault or privity in the following cases, namely: 


438 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


(1) Where any goods, merchandise, or other things whatsoever taken in or 
put on board his ship are lost or damaged by reason of fire on board the ship. 

5. The points of importance to note here are the comprehensiveness of the list 
of exempt.ons or, as they are aften called, “ excepted perils ” in the Canadian act 
and their being unconditioned, also the apparent complexity of the Austral an 
section. 

(D) 1. The Canadian act alone of the legislation we are here concerned with 
contains any definite provis'on limiting the amount of the liability in connection 
with goods. This provision in section 8, which is: 

“ The ship, the owner, charterer, master, or agent shall not he liable for loss 
or damage to or in connection with goods for a greater amount than $100 per 
package, unless a higher value is stated in the bill of lading or other shipping 
docmument, nor for any loss or damage whatever if the nature or value of such 
goods has been falsely stated by the shipper, unless such false statement has 
been made by inadvertence or error. The declaration by the shipper as to the 
nature and value of the goods shall not be considered as binding or conclusive on 
the ship, her owner, charterer, master, or agent.” 

In this connection reference should be made to the general overriding limi¬ 
tations of aggregate liability and to the special provisions in regard to valuables 
contained in section 502 (ii), 503 (i) of the merchant shipping act, which are as 
follows: 

502. The owner of a British seagoing ship, or any share therein, shall not he 
liable to make good to any extent whatever any loss or damage happening with¬ 
out his actual fault or privity in the following cases, namely: 

(ii) Where any gold, silver, diamonds, watches, jewels, or precious stones 
taken in or put on board his ship, the true nature and value of which have not 
at the time of shipment been declared by the owner or shipper thereof to the 
owner or master of the ship in the hills of lading or otherwise in writing, are 
lost or damaged by reason of any robbery, embezzlement, making away with, 
or secreting thereof. 

503. The owners of a ship, British Or foreign, shall not, where all or any of the 
follow ng occurrences take place, without their actual fault or privity (that is 
to say) : 

(a) Where any loss of life or personal injury is caused to any person being 
carried in the ship: 

( b ) Where any damage or loss is caused to any goods, merchandise, or other 
things whatsoever on board the ship; 

(e) Where any loss of life or personal injury is caused to any person carried 
in any other vessel by reason of the improper navigation of the ship; 

(c/) Where any loss or daifiage is caused to any other vessel, or to any goods, 
merchandise, or other things whatsoever on board any other vessel by reason 
of the improper navigation of the ship; 

be liable to damages beyond the following amounts (that is to say) : 

(i) In respect of loss of life or personal injury, either alone or together, with 
loss of or damage to vessels, goods, merchandise, or other things, an aggregate 
amount not exceeding £15 for each ton of their ship’s tonnage, and 

(ii) In respect of loss of or damage to vessels, goods, merchandise, or other 
things, whether there be in addition loss of life or personal injury or not, an 
aggregate amount not exceeding £8 for each ton of their ship's tonnage. • 

Contrary to what might have been expected, it has been held that similar limi¬ 
tations of liability to that provided for in the Canadian act are not illegal under 
the Australian, New Zealand, and Harter Acts, and it is customary to insert 
such in all bills of lading. 

(E) The Canadian, the Australian, and apparently the New Zealand legisla¬ 
tion 1 on this subject applies only to ships carrying goods from those Dominions 
severally. The Harter Act applies to any vessel between ports of the United 
States and foreign ports; in other words, to bills of lading issued in countries 
other than the United States of America. 

(F) The Canadian act applies to all goods, “except live animals and lumber, 
deals, and other articles usually described as ‘ wood goods.’ ” 

The Australian act, section 300, of the New Zealand act (i. e., the main pro- 
Adsion only), and sections 1 and 4 of the Harter Act (i. e., the provisions as to 


1 Section 293 of the shipping and seamen act refers to any ship transporting merchan¬ 
dise or property to or from any port in New Zealand, but section 9 of the 1911 act, which 
relates to jurisdiction, refers only to any bill of lading or other document relating to the 
carriage of goods from any place in New Zealand. 




THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


439 


liability in respect of the proper loading, stowage, custody, care, and delivery 
ot goods, and as to issuing a bill of lading only) do not apply to live animals, 
but otherwise the legislation is of perfectly general application. 

(G) Section 9 of the Canadian act requires the issue on demand of a bill 
of lading describing the goods and their apparent order and condition, and 
section 5 requires that every bill of lading shall contain a clause to the effect 
that the shipment is subject to the act, and specifically forbids any stipulation 
or agreement purporting to oust the jurisdiction “ of any court having juris¬ 
diction at the port of loading in Canada in respect of the bill of lading or 
document.” 

Section G of the Australian act and section 9 of the New Zealand shipping 
and seamen amendment act, 1911, are similar in effect to section 5 of the! 
Canadian act. 

Section 4 of the Harter Act is similar to section 9 of the Canadian act. 

(H) Section 12 of the Canadian act provides for penalties (a fine of not 
exceeding $1,000, with cost of prosecution) for breaches of its provisions, and 
that the ship concerned may be libeled in this connection in any admiralty 
district in Canada. 

Section 7 of the Australian act similarly imposes a penalty of £100. 

The New Zealand acts do not contain any penalty clause. 

Section 5 of the Harter Act also provides for penalties, a fine not exceeding 
$2,000, and that the vessel may be libeled for the amount of the fine and costs. 

The above are the essential provisions of the Canadian water carriage of 
goods act and of the other similar acts. There are certain other provisions, 
which it will suffice to mention, viz: 

(a) Section 11 provides that when a ship arrives at a port where goods are 
to be delivered, the owner, charterer, master, or agent shall forthwith give 
to the consignees such notice as is customary at the port of the ship’s arrival. 

(&) Sections 13 and 14 deal with the shipment of dangerous goods. The 
former imposes a penalty on persons shipping goods of an inflammable, ex¬ 
plosive, or dangerous nature without previously obtaining the written per¬ 
mission of the agent, master, or person in charge of the ship, and the latter 
provides that if such goods are shipped without such permission they may be 
destroyed or rendered innocuous, without compensation to the owner, shipper, 
or consignee, the shipper to be liable for all damages arising directly or in¬ 
directly out of the shipment. 

No similar enactments occur in the Australian or Harter acts, but the New 
Zealand act contains a provision, section 302 (2), to the effect that notice 
of any claim for short delivery or pillage of cargo must be made to the agents 
in New Zealand of any ship not registered in New Zealand not later than' 14 
days after the delivery of the cargo in respect of which the claim is made. The 
first part of that section makes those agents responsible, with provision that 
in the event of their declining to accept the responsibility the master and 
another approved person shall enter into a bond before the ship is allowed 
clearance. 

Sections 446-450 of the merchant shipping act, 1894, deals with the shipment 
of dangerous goods, and include provisions similar to those of the Canadian 
act. 


[Appendix III.] 

Minute of Proceedings of a Meeting, Held at the Offices of the Foard of 
Trade on Friday, December 10, 1920, Between Representatives of the Rub¬ 
ber Growers’ Association, of Certain Shipping Lines in the Far Eastern 
Trade, and of the Eastern Exchange Banks in Regard to the Use of the 
Phrase, “ Shipped or Received for Shipment,” in Bills of Lading. 

The following minute was agreed to by all the parties and signed by the 

chairman: . , . x .. . . . . . 

The imperial shipping committee was appointed inter alia to inquire into 

complaints from persons and bodies interested with regard to ocean freights, 
facilities, and conditions in the interimperial trade. 

These proceedings are in respect of such # a complaint from tlie liubbei 
Growers’ Association, which was addressed to the committee in a letter from 
the association of July 27, 1920. The complaint was to the effect that ceitain 



440 THEFT, ETC., OF EXPOET AND IMPORT SHIPMENTS. 

shipping companies had departed from the customary wording of bills of 
lading, which began “shipped” simply, by substituting such wording as 
“ shipped or delivered! for shipment,” and they asked that the imperial shipping 
committee should take action to induce the shipping companies effected to revert 
to the single word “ shipped.” 

The shipping lines concerned were originally the Glen & Shire, Ben & Bolt 
Lines, but it appeared that the complaint against the Ben Line had subsequently 
been dropped. 

The meeting of December 10 had been arranged after correspondence be¬ 
tween the imperial shipping committee and the Rubber Growers’ Association, 
the shipping lines concerned, and also the National Bank of India, as repre¬ 
senting the eastern exchange banks. 

There were present: Sir Halford J. Mackinder, M. P.; Sir Edward Rosling, 
Mr. Norman W. Grieve, Mr. Frank Smith, of the Rubber Growers’ Association;. 
Mr. Richard D. Holt, of Messrs. A. Holt & Co.; Mr. E. E. Hills, of Messrs. 
The Glen Line (Ltd.), and the Shire Line; Mr. J. Y. Munro, of the National 
Bank of India; Mr. E. J. Elliot, secretary to the imperial shipping committee. 

The complaint of the Rubber Growers’ Association, as put forward by Sir 
Edward Rosling at the meeting, was to the effect that the bill of lading, issued 
by Messrs. Alfred Holt & Co. and the Glen and Shire Lines for the homeward 
trade in rubber, was printed with the phrase “ shipped or received for ship¬ 
ment,” but this was a departure from the old and customary form of the bill 
of lading, which created certain difficulties in connection with subsequent 
dealing with the rubber shipments in question. He asked that, as the normal 
printed form of the bill of lading for the trade, these shipping companies should 
restore the bill of lading containing only the word “ shipped,” instead of the 
phrase mentioned above. The attitude of the eastern exchange banks was 
that they could not regard a “ received for shipment ” bill of lading as an 
effective instrument for their purposes; they must have a definite certificate 
of shipment, which the ordinary form of bill of lading gives, and Mr. Munro 
stated that these banks had recently determined among themselves, in Shanghai, 
that the “ received for shipment ” bill of lading should not be accepted at all. 

Mr. Holt pointed out that his shipping company were always prepared to 
give a “ shipped ” bill of lading where the goods had actually been shipped, 
and all parties agreed that in no circumstances should a “ shipped ” bill of 
lading be given before shipment had actually taken place. Mr. Holt said 
that the “ received for shipment ” form had been introduced to suit the con¬ 
venience of the majority of the shipping companies’ customers in the trade, 
and that he thought the traders would experience considerable inconvenience 
if they used only a “ shipped ” bill of lading, which could not be issued until 
later than the other form, and might in many cases arrive in this country 
after the goods in question, thus causing inconvenience and delay. 

Mr. Holt, however, stated that he would forthwith give instructions for the 
preparation and issue of two different forms of bill of lading for use in the 
trade in question, one of which should contain the word “ shipped ” alone, 
printed in black ink, and the other the phrase “ shipped or delivered for ship¬ 
ment,” printed in red ink, to make the form readily distinguishable from the 
other. These forms would be for homeward business only, and by means 
of the choice thus offered to shippers, it would be possible for them and the 
banks to determine which should be the form most generally used. The repre’ 
sentatives of the Rubber Growers’ Association and Mr. Munro, on behalf of the 
eastern exchange banks, were understood to accept this arrangement as afford¬ 
ing the means of a settlement of the difficulty. These interests would issue 
to their members or agents notice of these arrangements, advising that the 
“ shipped ” bill of lading should be alone called for. 

Mr. Hills acquiesced in this arrangement on behalf of Messrs. The Glen 
Line and the Shire Line. 

Mr. Munro undertook to put it before the eastern exchange banks that they 
should do their best, so far as lay within their power and knowledge, to dis¬ 
courage any improper premature issue of “ shipped ” bills of lading, i. e., 
before the goods had actually been shipped. It was made clear in this con¬ 
nection that there was no suggestion that the banks had in any way coun¬ 
tenanced this practice in the past. 




THEFT, ETC 1 ., OF EXPORT AND IMPORT SHIPMENTS. 441 


Appendix II. 

PI LI EIIAGE INTERIM REPORT OF COMMITTEE APPOINTED BY THE COUNCIL OF THE 
CHAMBER OF SHIPPING OF THE UNITED KINGDOM. 

I lie committee which was appointed by the council for the purpose of investi¬ 
gation of the question of pilferage lias conducted an extensive inquiry, and is 
now in a position to submit an interim report. 

llie evil of pilferage has reached very grave dimensions, and the following 
instances will Show that strong action is necessary if the growing practice is 
to be counteracted. 

One company estimated, when this question first came into prominence, that 
upon each round voyage of two cargoes made in a wide variety of trades the 
shortage claims—believed to be due almost wholly to pilferage and theft— 
averaged £2,500 per voyage. 

A second company with less varied trade estimated that every cargo out and 
home costs an average of £1,000 in claims paid, say £2,000 for the round voyage. 

A third company produced statistics showing that whereas before the war 
claims averaged 1.44d. per ton of cargo handled, they recently averaged 26.91d. 
per ton of cargo handled, an increase of nearly 2,000 per cent, and they are 
still increasing. 

A fourth instance gives statistics of an outward trade served by some seven 
or eight steamship companies in which the average for the first nine months of 
last year was 3s. per ton of cargo handled. 

The committee feels that a very great deal can be done by the shipowners 
themselves to eradicate the evil for the period during which the goods are in 
their charge, and it is thought that the pivot of the situation is the system of 
tallies and watching. Instances were quoted to the committee of the claims 
paid by seven separate companies all running in the same trade with the same 
agents where the average cost per ton of cargo varied from Is. 9d. to 5s. 2d., 
and there was substantial evidence that this notable divergence in the figures by 
different steamers was in the main due to varying practices on board in the 
matter of tallying and watching. 

The question of tallies and watching has, therefore, received special attention 
and the committee wishes to submit the following recommendations: 

• 1. That tallies should be taken both in and out of the ship. It is specially 
important that this should be done when discharging (a) into open quays or 
(5) into lighters, and it is also of the first importance when discharging on to 
the quays of dock and warehouse authorities. 

Frequently the dock authorities discourage tallies on discharge. This is 
natural and understandable, since the responsibility for the safe custody of 
goods between discharge from the ship and delivery to the consignees on the 
quay or warehouse rests with them. During that time goods are often lost. IT 
a tally has not been kept on the ship it is impossible to prove delivery to the 
dock authority and claims for goods so lost are passed on to the ship and the 
shipowners are powerless to repudiate them. 

The dock companies urge that tallies involve delay to the ship. The 
committee is of opinion, however, that there need rarely be any material delay, 
and further, that shortage claims are now so grave that the gain from tallying 
would in general outweigh rare cases where actual loss might arise from delay. 

Further, the committee considers that even where shipping companies use 
their own wharves it is desirable that careful tallies should be kept. 

Where proper tallies are not kept it is impossible as a rule for the ship¬ 
owner, or even those in charge of the warehouse, to know whether a loss has 
arisen in the warehouse or not, the goods being tallied only on delivery from 
the warehouse. A shortage may have arisen in the warehouse, on the ship, or 
even before the ship loaded. Tallies at the rail would, therefore, assist those 
in charge of the wharf, the master, and the shipowners to trace any losses, and 
the responsibilities of the ships’ officers on the one hand and of the wharf 
officials on the other would be defined. 

2. That in all cases when holds are open, whether loading or discharging. 
(a) there should be efficient control and supervision by the officers of the ship, 
and (ft) where officers can not be present at all holds they should appoint their 
own substitutes from among the petty officers, apprentices, wireless operators 
(vide infra) and other members of the crew. It is not proposed that officers 


442 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


should be required to take the tallies themselves where it is not customary, 
but the committee desires to emphasize the ultimate responsibility of the officers 

With reference to (a) the committee wishes strongly to urge that the super¬ 
vision, if not the actual tallying, is the province of the officers’ responsibility. 
In small ships the tally is conveniently taken by the officers; in large ships the 
superintendence of the tally is a matter for the officers whilst the tally clerks do 
the work. Where tallying is now customarily done by tally clerks or others it 
is not desirable to revert to the practice of requiring the officers actually to do 
the tallying, but they must take responsibility for it as effectively as for the safe 
navigation of the ship, and officers should be made to feel that good or bad out¬ 
turns will weigh with owners in considering promotion as well as good or bad 
navigation. 

With reference to ( b ) in home ports, where it is a common practice to allow 
officers to be away on leave, care should be taken that a sufficient number of 
officers are left to perform cargo duties and that the duties of those absent are 
devolved upon officers remaining or substitutes. They strongly recommend 
that the practice of supplying relieving officers should be extended. 

The committee also recommend that the wireless operators and watchers 
should be employed in addition to the officers in connection with the work of 
tallying, supervising, and watching, and it is desirable that they should eventu¬ 
ally be regarded as an integral part of the ship’s personnel for performing 
cargo duties in port under the supervision of the master. 

The committee wish to make the following recommendations concerning 
pilferage reports to owners: 

1. That prompt reports should be sent direct to the owners at the time when 
the pilferage is discovered. 

2. That the reports should divide the claims, showing specifically which 
claims arise from pilferage. 

The committee wish to point out that “special goods” unless they are under 
bars and keys invite the attention of pilferers. 

In regard to legal, magisterial, and police action the committee wish to 
recommend that— 

(1) Shipowners should prosecute every detected case of pilferage. There is a 
certain chariness about instituting legal proceedings, but such proceedings are 
imperative if pilferage is to be stopped. 

(2) The magistrates should be urged to set their faces against merely in¬ 
flicting fines, often paid out of subscriptions by the offender’s associates. Fines 
are generally inadequate, and they should award imprisonment to persons 
convicted of larceny. 

(3) The magistrates’ powers of dealing with persons convicted of unlawful 
possession should be enlarged and the maximum fine should be increased from 
£5 to £20. 

' (4) Further, the river and dock police forces should be strengthened and 
encouraged in vigilance. 

The commitee wish to make the following recommendations in regard to 
dock and harbor authorities : 

(1) That the authorities should be more strict in the scrutiny of persons 
allowed to enter and leave dock and harbor premises. 

(2) That a system of triplicate passes should be adopted in all ports for 
goods taken out of docks (called “goods passes”), one to be retained in the 
pass book of ship and two to be handed to the person in charge of the goods 
to be given up at the dock gates. The dock authority should retain one of these 
two for their purposes and send the other to the ship’s agent. 

(3) That there shoud be stricter examination of conveyances by road and 
water (carts, lighters, etc.) by those who are charged with the duty of doing so. 

(4) That where received by the dock or harbor authorities they should 
always give receipts for goods which are tallied by the ship at the ship’s rail. 

The committee wishes to recommend that the cooperation of the labor unions 
should be sought in encouraging a strong and healthy public opinion on the 
moral aspect of the evil, and it should be brought home to employers and 
employed that it is a stigma on the great body of those engaged in trade that the 
nefarious practices of pilferage and theft should have such great vogue to-day. 

In conclusion, the committee wish to emphasize the paramount importance 
for ships’ officers of cargo duties under present-day conditions over all other 
duties in port. They believe from experience already acquired that if generally 
adopted their recommendations will speedily reduce the pilferage evil to small 
dimensions as affecting steamship owners, and they look forward to a time in 


THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 


443 


tiie near future when less strict pract ces will be necessary by reason of the 
improved public sentiment on this subject. The quicker the action taken the 
quicker and more complete the result achieved. 

L. C. Harris, chairman of committee. Ellerman & Bucknall Steam¬ 
ship Go. (Ltd.) : E. F. Abbott, Union-Castle Mail Steamship Co. 
(Ltd.); W. G. Inglis, Anderson, Green & Co. (Ltd.); H. R. 
Miller, United Kingdom Mutual Steamship Assurance Associa¬ 
tion ; G. H. Noakes, New Zealand Shipping Co. (Ltd.) ; A. Woods, 
Lamport & Holt (Ltd.); C. Dance, Atlantic Transport Co. 
(Ltd.) ; H. M. Cleminson, general manager Chamber of Shipping 
of the United Kingdom; C. V. S. Potts, secretary of committee. 
28 St. Mary Axe, London, E. C. 3. 

25 March, 1i)21. 


SECOND INTERIM REPORT OF THE CHAMBER OK SHIPPING PILFERAGE COMMITTEE. 

The following are some of the matters which have been considered by the com¬ 
mittee since their last report: 

The committee recommend that the custom of issuing bills of ladhig for 
goods “ Received for shipment,” except where the circumstances make no other 
form appropriate, should be discouraged; as it gives scope for pilferage, and in 
no case should shipowners, under whatsoever pressure from merchants, issue a 
“ shipped ” bill of lading until the goods are on board the steamer, as the diffi¬ 
culties of protecting the steamer against claims for pilferage which may have 
happened before shipment are thereby greatly increased. 

The committee have had many interviews with the representatives of the 
London lighterage trade and have come to an agreement with them by which 
the present London lighterage clause is to be amended in a manner which has 
been accepted as satisfactory by the London Chamber of Commerce as well as 
by your committee. The lightermen agree to accept responsibility for pilferage 
and theft of goods while in their care up to a limited amount. 

The adoption of the new lighterage clause is in suspense until the bill before 
Parliament is passed which the lightermen are promoting for limiting their 
liability in respect of life and property on tbe lines of the merchant shipping 
act. 

The committee are following the results of the London police scheme. This 
is very effective where adopted, but owing to lack of support the scheme is 
about to be withdrawn from certain docks in London which are chiefly used by 
lines not controlled in London. It is understood, however, that the police 
authorities are seriously considering the extension of the London special dock 
police scheme to the whole of the river, which the head of the dock police has 
stated could be done at a cost of about £50,000 per annum with 200 additional 
men. 

Schemes on a basis very similar to that which has been in force in London 
for the last 12 months are being inaugurated in several of the Australian States 
on the basis of a levy on the steamers of from l^d. to 2d. per ton of cargo 
handled, and it is very satisfactory to find that the labor unions as a rule are 
not averse to these means of purging their membership of the less desirable 
characters and of maintaining the reputation of workingmen for common 
honesty. 

Your committee have been referred to on one or two occasions for assistance 
in dealing with special problems at foreign ports com-'ng within the scope of 
their reference, and in one particular matter they have deemed it expedient to 
invoke the cooperation of the seamen’s union, as the interests of the seamen, as 
well as of shipowners, were very specially involved. In another instance a group 
of owners in a particular trade invoked the assistance of the chamber to deal 
with a system amounting to nothing less than armed robbery which prevailed at 
a Mediterranean port, and steps are in hand which are expected to bring about 
a remedy. 

Your committee desire to bring to the notice of shipowners this department 
which is responsible to the foreign office and the board of trade for commercial 
matters in the hands of British Government representatives abroad. Each 
British ambassador and master has on his staff a commercial secretary, who is 
responsible for coordinating the work of the consuls. Some of the commercial 


444 


THEFT, ETC., OF EXPORT AND IMPORT SPIIPMENTS. 


secretaries during their leave in this country have visited the chamber. They ap¬ 
pear to have been excellently well chosen for their combined knowledge of 
British commercial matters and the conditions of the country to which they 
are accredited, and in the committee’s view shipowners would be well advised to 
keep in touch with these gentlemen. Your committee have already received 
valuable assistance from these officials in several countries in connection with 
pilferage matters. 

Owing to the difficulty during the war of shippers obtaining materials of pre¬ 
war quality for packing their goods, and also owing to the need of better pack¬ 
ing to prevent the increased pilferage, the question of what is adequate packing 
lias been much discussed of late. 

Facts have been brought to the knowledge of the committee showing that 
where the steamship line has dictated the exact method of package for goods, 
some shippers have evaded the regulation by complying with it in the letter, 
but not in the spirit, such as by putting a double gunny of less thickness than 
the single original one. 

As a general principle the committee deprecate the adoption of any formula 
by shipowners defining what will be accepted as satisfactory packing for 
various goods. A shipowner not having knowledge of the contents can not 
definitely state that the packing is satisfactory, and the specification of what 
is adequate packing is a matter for the shipper of the goods. Shipowners, 
therefore, should reserve their right to reject goods appearing to be insuffi¬ 
ciently packed, and also their right to plead insufficiency of packing. The 
merchants recognize this principle, and the London Chamber of Commerce 
have conducted some very interesting experiments revealing the qualities 
required in a packing case to stand the wear and tear of ocean transit and 
to hamper expert thieves. 

In investigating this matter of pilferage, the attention of the committee has 
been drawn to the practice in some services of clausing mates’ receipts some¬ 
what indiscriminately with the words such as “ more or less frail.” 

The actual condition of the goods should at all times be accurately noted 
in detail, and the practice which many shippers desire of the shipowner 
accepting indemnities in lieu of clausing bills of lading in accordance with 
the facts, should be discouraged to the utmost. 

The committee have very carefully considered with expert assistance a 
number of devices to make pilferage on board ship more difficult, and they 
are preparing a schedule containing some suggestions of this character which 
may be useful to shipowners. 

Owners might well take the present opportunity to overhaul their standing 
instructions to masters and officers in respect to the care of cargo, with the 
object of bringing them up to date on this subject. 

There remains but one important matter for your committee to deal with 
before they make their final report. The information which has been brought 
together has shown that at many ports of the world practices are growing up 
which raise difficulties in the way of making accurate and good deliveries ex 
ship. In particular there is great difficulty at many ports in obtaining for the 
ships’ officers a satisfactory account of the condition in which the goods are 
delivered out of their steamers, owing to the practice with many harbor 
authorities of intervening between the steamship and the consignee and taking 
the goods into shed or warehouse without any receipt or tally being taken 
or given until the goods are eventually delivered out of the shed to the con¬ 
signee, which usually takes place some time after the steamer has left the 
port. The committee are collating exact information, with a view to seeing 
whether the chamber can take or promote any action to get a better state 
of affairs. The experience already gained in a few cases indicates that 
important results for the benefit of shipping may be achieved in this con¬ 
nection, which should permanently assure the prospect of satisfactory out¬ 
turns of cargo. Meantime, they would call the attention of shipowners to the 
fact that a tally ex ship is sufficient evidence of the discharge of the cargo, 
even though the receiving authority refuses to attend the tally: and as it is 
a customary stipulation in the bill of lading as well as the general rule of 
common law that the shipowner’s responsibility is to cease upon the goods 
leaving the ship, such a tally should be taken and claims settled in accordance 
with its finding, and not in accordance with the later finding after much 
pilferage may have happened while the goods are in the hands of <lock 
authorities or others. 




THEFT, ETC., OF EXPORT AND IMPORT SHIPMENTS. 445 

The general proposition underlying our recommendations is the responsibility 
of the deck officers for the proper reception, carriage, and delivery ex ship of 
their cargoes in good condition, and of the shipowners for giving every facility 
to the officers to perform these duties. 

L. C. Harris, chairman of committee, Ellerman & Bucknall Steam¬ 
ship Co. (Ltd.) ; E. F. Abbott, Union-Castle Mail Steamship 
Co. (Ltd.) ; C. Dance, Atlantic Transport Co. (Ltd.) ; W. G. 
Iuglis, Anderson, Green & Co. (Ltd.) ; H. It. Miller, United 
Kingdom Mutual Steamship Assurance Association; G. H. 
Noakes, New eZaland Shipping Co. (Ltd.) ; A. Woods, Lamport 
& Holt (Ltd.) ; H. M. Cleminson, general manager Chamber 
of Shipping of the United Kingdom; C. V. S. Potts, secretary 
of committee. 

28, St. Mary Axe, London, E.C.3, 

30 th June, 1921. 


SUBJECT INDEX. 


Amendments and suggestions proposed: Page*. 

Agreed upon values for less than full value prohibited-Id, 19. 35—3(5, 

37, 42, 47. 71, S2-S3, 136, 170, 176. 193, 197-198, 
400, 401, 404-405, 412, 413, 423-424, 427-428, 431 
Bills of lading to be liled and not changed except on notice— 112, 117. 170 

Bills of lading, revision of_106. Ill, 113—115, 133, 137—139. 160, 2(57-269 

Burden of proving freedom‘from negligence to be upon the carrier. 19, 36, 

37, 42, 47, 83, 136, 167, 176-177, 193, 197, 219, 221, 401 

Carrier empowered to demand statement of true values-19,83 

Carrier to be obligated to give shipper notice in certain cases- 269-270 

Cooperation between interests for betterment of conditions- 21. 

50. 54. 55, 58, 61. 67-68, 71, 77-78, 367, 429, 432, 436- 

Dual bill of lading, one insured and the other released- 21, 

22, 50, 69, 71. 79, 99-101 

International agreement along the line of the Carmack amendment. 79-80,. 

93-94. 128-129 

Legislative enactments, other_ 80-81.126,128,194-196,201-202.272-279 

Liability of all carriers participating in through international ship¬ 
ments_ 82 

Notice of claim to carrier within reasonable time_ 17,. 

83. 136, 166-167. 173, 174, 177, 199-200, 218-219 

Omission of faults of management from the Harter Act___ 136 

Original carrier to be liable_- 83,131,136 

Plans for controlling losses through physical efforts_151-152, 

229-231, 311, 415-417, 441-445 

Prosecution of theft and pilferage cases___ 151 

Reasonable maximum limits of liability for damage_,_ 21, 

166, 206, 421, 423-424, 431 

Reasonable time for commencement of suits_11, 83 

Rigid enforcement of penalties_,_ 290-293, 304, 313-318 

Through bill of lading, formulation of_123-126 

Truck delivering companies, made liable by legislation_ 290 

American Steamship Owners’ Mutual Protection & Indemnity Associa¬ 
tion, work of_ 314-318,355-363,369 

Australian act (1904)_ 421. 422, 430-431, 435-439 

Bill of lading provisions objected to: 

Carrier assuming all rights of foreign ports_ 20,83,204 

Carrier not liable for anything that can he insured against_ 43.85,200 

Cessation of responsibility upon discharge of goods without notice_ 92 

Heat, shrinkage, drainage, sweat, and similar losses, exclusion of 

liability for_ 20,105,113 

Liability conditioned on written notice of claim before removal of 

goods-105,119 

Lighterage and similar services presumed to be independent_ 85.86. 93 

Loan receipts, carrier obtaining advantage of_ 49-50, 200 

Marine insurance, benefit of, going to carrier_ 13, 

42-43, 49, 84-85,193. 200. 224, 385 

No liability after goods leave vessel’s tackle_ 83 

No liability for barratry of masters or crew_83, 86 

No liability for breakage, irrespective of cause_ 86 

No liability for change of temperature affecting perishables_105,108 

No liability for loss of weight_ 107.409 

No liability for marks, etc_ 406, 409 

No liability for negligence, default, or error of master, mariners, en¬ 
gineers, etc_ 

446 


114 




































SUBJECT INDEX. 


447 


Bill of lading provisions objected to—Continued. Page. 

No liability for notice of arrival to consignee_ 164-165 • 

No liability for pilferage___ 107 

No liability for shipping live stock on same deck with meats, etc_ 104 

No liability for shipping meats, etc., in bunkering holds, etc__ 104-105,114 

No liability for winches, loading gear, etc_84,113 

No liability of carrier to give notice where goods were delivered in 

consequence of quarantine, strikes, etc_ 115 

No liability unless neglect is shown to have been sole cause of loss_ 84 

No return of prepaid freight in case of loss through negligence_ 175 

Nominal agreed-upon value_ 11.13,21,22-23, 

86, 105, 106, 107, 108, 131-132, 156-157, 160-161, 165-166, 178, 
179-180, 182, 183-185. 186-187, 199, 216-217, 219-220, 267-268, 
322, 341-342, 354-355. 361-362, 376-378, 379-380, 386, 397, 398 

Notice of loss within an agreed upon time after delivery_11,13 

Seaworthiness only in the hiring of proper master and crew_ 84 

Shipper liable for return freight if goods are returned_ 115 

Shipper’s obligation to prove any omission of carrier to exercise due 

dilligence__20, 84 

Suits within limited time after delivery_ 11,193,199, 372 

Withdrawal, diversion, or substitution of boats, exercise of_ 103, 

106,108,149, 220, 323-324, 401 

Bills of lading: 

Difficulty of procuring at interior points of shipment_ 103,112, 330-332, 337 

Inability to read and understand_•_ 103-104,116, 427, 430 

Lack of uniformity_ 218, 403, 406, 409,422 

Practice of changing without notice_168-169 

Bill of lading act (Aug. 19, 1916)_'_ 131 

Breakage losses_ 73 

Bull-Insular Line, method of controlling losses_ 351-354 

Canadian water carriage of goods act_ 376, 378, 396, 421-422, 431, 435^139 

Carmack amendment_ 79-80, 217-218 

Chamber of Commerce of the United States, bill of lading proposed by_ 87 

Common-law liability for negligence, modification of_10,11, 

12, 13, 14. 15, 20, 29-35, 97, 98, 133-134, 143-144, 
186, 193, 213-214, 326. 329, 368, 369-371, 375-376. 
378-380, 380-381, 385-386, 390-392, 398-399. 426 

Consignees, loss through dishonesty of_74-75 

Contact with other cargo damage___39, 42 

Council of the Chamber of Shipping of the United Kingdom, report of 

committee appointed by_ 441-445 

Cummins Act. purpose of_ 14,17,18, 36-37, 221-222 

Customhouse losses _ 19 

Delays in arrival, loss through_ 73 

English carriers, attitude concerning bills of lading- 204—205, 206, 256 

Exceptional cargo risks, special treatment of as regards bill of lading— 422, 424 

Freedom of contract in bills of lading, absence of_ 14,15, 97, 98,131-132, 

149-150,189-190,198-199. 202-203, 215-216, 420, 427, 429-430 

Fresh-water damage_ 39 

Harter Act, purpose of_14,17, 

22, 23, 35-36, 47, 53-54, 64, 92, 96, 192-193, 197 

Imperial shipping committee report_ 20-21, 25, 79, 396-397, 417-440 

International Mercantile Marine Co., methods of control and settling 

losses_ 294-302 

Interstate Commerce Commission, proceedings before, on bills of lad¬ 
ing__ 104,105-106,123-126. 3S1 

Japan, articles 592 of the Commercial Code-- 421 

Leakage losses_— 41-42,76 

Lloyd’s surveyors, arbitrary fixing of losses by causes- 107-108,173 

London conference on uniform bill of lading-^ 201 

Munson Steamship Line, method of controlling losses- 307-310 

Nelson bill to amend the Harter Act, 1913, (S. 728)- 375-376 

New York law (1921) relating to powers of the board of wardens of New 

York port_145-147 

New Zealand shipping and seamen act (1903)- 436-439 

Nondelivery losses- 40 

On board bills of lading, inability of carriers to give- 324-325 












































448 


SUBJECT INDEX. 



Page. 

Packing, importance of___ 23, 

40, 41-42, 51-53, 54, 71-, 74,167, 231-236, 237, 238, 363-367 

Protection and indemnity insurance, in relation to such losses_ 24, 

90-92, 97,111-112, 314-318, 356, 361 

Rates, adequate, to he charged for assumption of liability_ 15, 

16, 19, 96-97, 106, 121-122, 165-166, 189-191, 202-204, 214-215, 
217, 251-252, 253, 255, 322-323, 334-335, 339, 342, 346, 
347-348, 350-351, 354-355, 376-378, 384-385, 386-387, 434 

Rates based upon released hills of lading_ 11,15,16,214-215,302,322 

“ Shipped or received for shipment,” use of term in bills of lading_ 439-440 

Shippers, loss through dishonesty of_74, 75 

Shipping Board, power to prescribe bills of lading_217-218, 405 

Stevedoring, loss by_i___ 43-45, 48 

Stowage, damage arising from poor_39, 42 

Subrogation, underwriters right to_:_42-43 

Theft and pilferage losses: 

Causes of_ 9, 

10, 12, 15, 43-44, 51, 52-53, 73-75, 109-111, 156-157, 157, 
213, 303, 320-321, 343-345, 349, 358-361, 374, 380, 383,403-404 

Classes of commodities, loss experience with respect to_ 28-29,40-41,95-96 

Extent of_5, 7, 8, 

9, 18, 19, 24, 26, 27, 28-29, 38, 39-40, 44, 50, 70-71, 75, 95, 
104, 107, 161, 181-182, 185, 208, 223-224, 228, 236-237, 
264, 269, 348, 359, 362-363, 403, 413-414, 426-427 

Insurance by carriers_24-25 

Marine insurance rates covering_ 8,23-24, 

28-29, 70-71, 75-76, 158-159, 161, 182-183, 208-209, 3S2, 390, 420 

Methods of controlling_ 9, 10, 23, 87-88, 98-99, 151-152, 172, 209-212, 

238-257, 279-289, 294-302, 307-310, 319-321, 351-354, 374, 403 

Place of loss_ 19, 21, 26-27, 43-44, 

52-54, 65-67, 71, 74, 82, 88, 90, 129-131, 173, 200-201, 215, 
229, 305, 306, 310-318, 367, 371-372, 399, 414, 423, 428-429, 431 

Relation to foreign trade prospects_7,12, 

13, 23, 25-26, 38-39, 42, 44, 51, 76-77, 78-79, 98, 99, 109, 
116, 118, 134-135, 148, 156, 159-160, 173, 181, 187-188, 209, 431 

Relation to marine insurance_ 7, 16, 37-38, 39, 

48-49, 55, 57, 73-74, 76-77, 95, 99, 109, 121, 134-135, 136, 144-145, 
152-153, 155-156, 188-189, 355-356, 392-396, 427, 431, 432-434 

Through bills of lading_ 123-126, 381-382 

Trade Protective Association_ 71, 148, 192, 194, 206-207 

Truckmen, loss by_1_82,162 

United American Lines, method of controlling losses_ 279-289 

Ward Line, method of controlling losses_ 238-257 


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